You would never hand the collateral to investors. Collateral is meant to be sold and the funds distributed by the investors.
If collateral is not enough to repay the total, something is better than nothing.
The other hundreds investors get nothing? Just a reward for the whales?
Where did you read that?Collateral is sold and distributed. That's what is written.
How exactly is this a reward for the whales and hundreds of investors with nothing?