Its becoming fashionable to blame Santhosh Kamath for taking Credit Risks that bombed. The issue that Franklin has faced was not about Credit but Cash Flow. My thoughts,
His strategy is excellent for some one wishing to have a High Yield Debt Portfolio. Unfortunately, his nemesis was that he executed the same in a Mutual Fund Sandbox.
Howard Marks, the famous distress fund investor buys high risk bonds. His strategy is to buy bonds that have been mispriced by the markets while actually being worth more.
Why the mispricing? Because when Investors are Greedy (in Bull Markets) they pay more than they should and when they are Fearful (like in current times), they are willing to sell a Dollar for less.
But when he raises funds, he doesn't raise with the promise to investors of paying back any-day they want. That doesn't work in the world of semi-liquid investments which require more time for the thesis to work out in its favor.
His funds have long period of lock-in's and post that, months in advance before you can get your investment back. In bad times (like now), the fund manager can even stop any redemption & ask investors to wait it out.
Take a look at the Portfolio of Franklin's largest fund that was closed - the Ultra Short Term Bond Fund. There are quite a few companies that may seem as risky, but most others are fine.
The problem Franklin faced was simply a lack of liquidity to service clients who wanted their money back on the very next day of their decision to exit. Indian Bond markets barely exist and in these tough times, have become less so.
Today, Advisors are claiming that Long Term Gilt funds are better options thanks to no Credit Risk. In 2008, on the back of the financial crisis, RBI dropped Interest Rates and Gilt funds provided superlative returns.
But if you invested in a Gilt fund in Jan 2009, by Jan 2014 (5 Years), your investment would have earned a grand amount of 3% (absolute return). Would you have stayed on?
Market is all about learning lessons from the actions of others (or self). This is definitely one such lesson for the ages.
My own exposure to Franklin was less than 5% of my Portfolio (Equity + Debt). The closure does hurt, but I think that the thought process that went into before I invested was not wrong.
Finally, we are all Greedy for Returns which is why we invest our meager savings in Equities hoping to generate a return better than what we can get in an SBI Fixed Deposit.
Process is the Key, not the analysis of results. Otherwise, we fall prey to "Resulting" 
