Recovery
Product manual for distressed assets, loss recovery, recovery funds, sales, claims, controls, and audit state.
Recovery is the action path for impaired positions. It covers liquidation outcomes, loss crystallization, recovery cash, Distressed Recovery Funds, side pockets, controlled sales, claims, and audit evidence. It does not guarantee settlement, liquidity, or a recovery amount.
The recovery sequence
- A liquidator can settle an unhealthy borrower position when the applicable market conditions allow it.
- Residual debt can be crystallized through
markLoss. This is accounting for one vault-market-borrower bucket; it is not an automatic fund acquisition and it does not prove that every liquidation route was exhausted. - A permitted recovery-fund manager can prepare a specific purchase after the required governance approval and evidence are in place.
- A closed recovery-fund epoch can commit quote assets to that purchase and create a separate side pocket.
- The side pocket can realize value through a direct sale, a permissioned auction, an invited RFQ, a workout payment, or an enabled in-kind distribution.
- Fund participants claim proceeds only from side pockets in which they hold a claim. Vault recovery cash remains on the originating vault path.
Keep the two recovery paths separate
Recovery cash paid to a vault first offsets its realized loss. A Distressed Recovery Fund is a separate, opt-in vehicle: its investors hold epoch and side-pocket claim units, and its sale or workout proceeds belong to those claims. A former vault depositor or a queued redemption claimant does not automatically receive later side-pocket proceeds unless that person also holds the relevant fund claim.
A fund purchase can provide a controlled route for impaired assets, but it does not alter the originating vault's redemption claims or give every historical lender a fund entitlement.
Recovery guides
- Distressed Recovery Funds: fund structure, epochs, side pockets, and investor exposure.
- Recovery lifecycle: the boundary between liquidation, loss accounting, and fund acquisition.
- Sale channels: direct sale, permissioned auction, and invited RFQ settlement.
- Claims and fees: idle redemption, quote proceeds, in-kind claims, and performance fees.
- Roles and controls: permissions, action approval, pauses, and evidence.
Asset Managers operate assigned funds from Distressed Recovery Funds. Buyers use their verified recovery-buyer workspace for direct sales, RFQs, and auctions.
Recovery actions execute from indexed recovery rows rather than editable modal fields. The exact row-selected actions are listed in Input Field Reference.
| Visible field | What the user enters or selects | What it is for |
|---|---|---|
Distressed Asset | No input. Read the impaired asset or position. | Identifies the recovery object. |
Recovery Cash | No input. Read recovered cash amount and source. | Shows cash available for recovery settlement. |
Waterfall | No input. Read senior/junior or recovery priority state. | Shows payment priority. |
Duplicate Claim Check | No input. Read duplicate or already-settled state. | Prevents repeated recovery for the same debt/cash source. |
Terminal Sweep | Click only where the terminal sweep action is visible and permitted. | Closes final residual recovery state. |
Audit Trail | No input. Read event, evidence, and projection rows. | Shows how the recovery moved through states. |
Search | Type borrower, market, collateral, or status. | Filters liquidation candidates. |
Borrower | No input. Read the borrower address or label. | Identifies the position being reviewed. |
Health | No input. Read the health or LLTV state. | Shows whether the position is liquidatable. |
Close Factor | No input. Read the maximum repayable debt portion. | Shows how much debt can be closed. |
Liquidation Bonus | No input. Read the configured incentive. | Shows collateral bonus for successful liquidation. |
Protective Price | No input. Read conservative price context. | Shows the price bound used to avoid unsafe settlement. |
Settlement Mode | No input. Read direct, delayed-claim, recovery, or terminal mode. | Shows how settlement will complete. |
Execute Liquidation | Click the row action after reviewing the candidate. | Submits the liquidation transaction for the indexed opportunity. |
Settle Claim | Click an open delayed-claim row. | Settles a liquidation-linked claim. |
Execute Recovery | Click a permitted recovery action row. | Runs a recovery fund purchase or recovery cash payment. |