This is not a standard financial vocabulary. Literally, the issuer's trust company pays the customer's investment money instead of the project party when the project party is unable to bear the repayment ability.
In the whole trust asset management company, there is a hidden rule of rigid redemption, which can be understood to some extent as the bottom-up treatment done by trust asset management companies. But at the legal level, there is actually no such requirement for trust companies.
The so-called rigid redemption means that after the trust product expires, the trust company must distribute the principal and income to investors. When the trust plan can't be paid as scheduled or it is difficult to pay, the trust company needs to handle it at the bottom. In fact, there is no law in our country that trust companies must promise rigid payment, which is just an unwritten rule in the trust industry.
Extended data:
Legal provisions related to redemption:
Article 49 of the Measures for the Administration of Trust Companies stipulates that a trust company shall set aside 5% of its after-tax profits as the trust compensation reserve every year, but when the total amount of compensation reserve reaches 20% of the registered capital of the company, it shall not be set aside.
At the same time, Article 34 of the Measures for the Administration of Trust Companies also stipulates that a trust company shall not "promise that the trust property will not be lost or guarantee the minimum income" when conducting trust business.
Article 8 of the Measures for the Administration of Collective Funds Trust Plans of Trust Companies also stipulates that when promoting trust plans, trust companies "shall not promise in any way that trust funds will not suffer losses, or promise in any way the minimum income of trust funds".
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