Defaults & Liquidation
Standard Operating Procedures on how ShuttleOne.Network handles borrower defaults

## Overview

Tokenizing real world assets to bridge the digital realm on the blockchain requires not only technical abilities on blockchain technologies but also process orientated procedures on how to recover defaults to protect Liquidity Providers and the SZO Token Holders.

## What is a Default?

A default is defined in Time as:
$D = T+259201$
Where
In simpler, ShuttleOne codes in a estimated 3 day grace for Fiat On Ramps to happen when the borrower repays back in fiat in their local currency before the smart contracts get repaid into the liquidity pools.
Technically, the Risk Assesement Tokens (NFT) that represents the underwriting collateral moves into an auction contract while we commence the Ecosystem Processes below.

## Ecosystem Process

Once a loan is deemed to be in default, ShuttleOne activates a 4 step procedure to commence to recover the debt.
1. 1.
Reminders of Financing Penalties (4 weeks)
2. 2.
Suspension of Trade Ecosystem Accounts (1 day)
3. 3.
Confiscation of Asset for Liquidation (3-6 weeks)
4. 4.
Legal Process in Permited Jurisdictions

### Reminders of Financing Penalties

For 4 weeks after the default has been confirmed, ShuttleOne through our ecosystem partners will try to communicate with the borrower to recover the principle with interests in arrears.
Email Communications with Defaulter
Other than the usual Emails, SalesOps also follows up with calls and visits to the borrower's operation facilities. Should defaulter choose to ignore these steps, we proceed to Step 2.

### Suspension of Trade Ecosystem Accounts

ShuttleOne partners Ecosystem partners such as ecommerce platforms, institutions and various other different types of digital partners to facilitate trade financing. The merchants comes through these distribution channels.
We then proceed to put up a request to our ecosystem partners to suspend their trading accounts for a period until the arrears are recovered. With this move, the borrower is put under more pressure that their business is at risk.
Should this method not work, we will proceed to Step 3.

### Confiscation of Assets for Liquidation

Every borrowing that ShuttleOne.Network facilitates, it is backed up by the receivables of the assets in the invoices. It can also be backed up by the cargo assets in trade financing.
We will therefore proceed to request for ownership of these assets to be liquidated in our Liquidators' Network to recover the arrears.
Different type of assets require different types of Liquidators. Currently within our network there represents Liquidators in:
1. 1.
Hospitals, Government Health Ministries
2. 2.
Supermarkets
3. 3.