Proposal for SSA Advisory and Legal Services Invoicing

Summary:
This proposal details the request for invoicing BUSD, USDC, and Alameda SBP pools for the Special Servicing Agent (the “SSA”) advisory and legal services rendered by Archblock. These services pertain to the ongoing legal pursuit of recovery from defaulted loans.

Background:
Since 2022, Archblock’s SSA team has been diligently working with the following borrowers to ensure maximum recovery from defaulted or restructured loans:

Lending Pool tfBUSD Pool tfUSDC Pool Alameda SBP
Original Loan Amount (Principal Only) $4,437,820 $5,500,000 $7,280,000
Principal Recovered To Date plus Additional Interest Payment from Restructured Loan $769,433 $1,537,363 $0
Estimated Recovery Based on Latest Developments TBD $6,837,856 TBD

Team Composition and Efforts:

The SSA team, composed of seasoned legal and financial professionals, has dedicated between 50-75 hours on average per month to defaulted/restructured loan recovery efforts. It is anticipated that these focused efforts will remain necessary for the foreseeable future, ensuring maximum recovery from the three borrowing pools.

Up until now, the SSA team has represented the DAO and SBP pool on a pro bono basis. However, given the extended nature of our engagement, it is necessary for Archblock to begin invoicing to ensure that our dedicated SSA team remains in place to further the recovery efforts.

Invoicing Proposal:

We propose a fee of $15,000/month for each lending pool, effective from September 1st, and continuing until the recovery process reaches a resolution.

Scope of Work:

Below are the key tasks the SSA team has been handling since the onset of the first default:

SSA Core Responsibilities:

  • Loan Restructuring
    • Negotiation with borrowers for loan restructuring.
    • Management of loan and interest repayments.
    • Active surveillance of borrower financial health.
  • Legal
  • Preparation of necessary documentation for legal proceedings and drafting of material legal documents.
  • Collaboration with external counsel in applicable jurisdictions for local legal representation.
  • Treasury/Forensic Analysis
  • Comprehensive analysis of the flow of funds concerning borrowers’ assets and liabilities.

To provide transparency and regular updates, the SSA team commits to sharing a quarterly or as needed, report with the community. This report will highlight any new recoveries, restructuring, or legal developments associated with the three lending pools.

5 Likes

Just to clarify, the $15,000/mo/pool will come out of the funds that are recovered? This is not requesting a transfer from the DAO, correct?

3 Likes

Yes, that’s correct.

3 Likes

Snapshot voting is live for this proposal.

:ballot_box: Vote here → Snapshot

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would love to see more transparency, 15k per pool is a lot of money especially since these claims are in different stages. Any chance that these invoices can be shared? Also what has been spent so far on recoveries? If this firm worked pro bono does this mean there is an additional % from recoveries that will be paid to these firms?

communication about the recoveries would be welcome as it has been bare minimum up until now.

Hi @capitalm - the most recent special servicing update can be found here: Archblock Special Servicing Update

  • Thank you, Capitalm, for your inquiry on the fees for servicing the three pools with defaulted or restructured loans within them. Please see the above post for the most up to date information on the recoveries across the various pools and the rationale for the fees being charged going forward. Regarding the Truefi tfUSDC pool and the delt.ai loan, yesterday we announced that 27% of the principal amount has been repaid and all interest payments due have been paid also so the restructured loan is performing as designed.
  • Regarding your query about the amounts being charged and amounts charged previously:
    • The fees were estimated to reflect a significant discount to the actual costs for the time being spent by both in house Archblock specialized personnel as well as out of pocket expenses incurred by Archblock consulting with outside legal counsel and a much more significant discount to what it would cost to have external resources represent any one of the various pools as a restructuring engagement. Based on market data points and benchmarking, we estimate that to engage a multi-discipline team (legal, finance, analytical, forensic and dispute expertise) equivalent to what we are bringing here at Archblock to all of the special servicing situations would cost multiples of what Archlbock is charging to do this work. Moreover, the prior statement assumes one can retain a firm or groups of equivalently trained individuals willing to engage on such small, niche default and special servicing situations.
    • Archblock’s internal team, composed of specialized legal, accounting and financial personnel performed these services on a pro bono basis, in some of the instances, for well over a year and will not charge for prior services (other than out of pocket legal costs to specialized counsel in other specialties or jurisdictions). The fee structure is looking forward and based on the now meaningful recovery achieved in each of the three pools covered. Once final resolution has been achieved or when Archblock determines there is no further productive path forward for recovery, fees will cease to be charged to any given pool.