Claims and Fees
How idle redemption, quote proceeds, in-kind claims, preferred return, and performance fees work in a recovery-fund side pocket.
A recovery fund has two distinct investor positions: idle capital in an epoch and committed capital in a side pocket. They have different redemption and claim rules.
| Position | What the investor holds | What can be claimed |
|---|---|---|
| Idle epoch capital | Quote assets not yet committed to a side pocket. | An idle redemption, subject to the epoch's remaining idle assets and any applicable claim pause. |
| Side-pocket claim | The investor's committed share of one acquired distressed exposure. | Quote proceeds as that side pocket realizes value, or an in-kind asset amount when that distribution is enabled. |
V3 epoch and side-pocket units are non-transferable. A participant materializes the side-pocket claim attached to the epoch position; it is not a transferable recovery token or a claim on every fund asset.
Quote proceeds
Direct-sale proceeds, auction proceeds, RFQ proceeds, and workout payments are recorded against the side pocket that generated them. Eligible participants can claim the cumulative quote proceeds that correspond to their materialized commitment. The fund checks the claim permission, claim-pause state, and prior claims before transferring the quote asset.
In-kind claims
The operations role can enable an in-kind distribution for a defined amount of the remaining distressed asset, a claim deadline, and evidence. Eligible participants can claim their pro-rata portion before that deadline. When the period ends, finalization releases any unclaimed reservation back to the side pocket; it does not extend an expired in-kind claim.
Preferred return and performance fee
Each epoch fixes its performance-fee rate, preferred-return rate, recipient, and configuration version. When a side pocket is funded, it carries those terms.
The performance fee is limited to the configured percentage of realized quote value above the side pocket's cost basis plus its time-based preferred return. It is not charged from an investor deposit at subscription and it cannot exceed the side pocket's realized value.
Pauses and finality
Protocol controls can emergency-pause a fund or pause a defined claim scope for a bounded period. A pause blocks the affected operation or claim; it does not turn a pending wallet transaction into a completed claim. Always use the canonical fund position, claimable amount, pause status, and activity record after confirmation.