In case of default

What happens if the asset originator doesn't repay the loan?

Whenever asset originator misses the repayment and even after the grace period (depending on the loans) there is no repayments it is detected as default. There would be on-chain and off-chain process to handle this default event. On-chain process Junior pool takes the loss :- while structuring the deal the junior tranche assumes the first loss. so based on the buffer if it's under the junior pool size, it would be taken completely by junior pool investors. As an effect, the size of junior pool buffer and interest rate will reduce depending on the size of default. Senior pool will stay unaffected until the buffer is in place. If the buffer is breached and junior pool goes to $0, then senior pool will start losing the rewards and principal depending on default amount.

Off-chain process

During the grace period as well as whenever a default is detected, investors communicate with the asset originator to identify the conditions leading to the default, remediate and agree to a repayment plan, and establish transparent solutions to move forward with future repayments.

In case of unsuccessful remediation process, Lenders can pursue off-chain legal recourse via excess interest spread, over-collateralisation and assets custody provided by the Asset Originators to recoup losses. All pools on Qiro are fully over-collateralised with off-chain assets. After such actions or liquidations the proceeds will be paid to tranche token holders based on the tranche they are invested in.