4.3.2.2. Non-Amicable Wind Down Process

Once the Amicable Wind Down Period has lapsed, and provided that the Owed M exceeds 0 and the Collateral Storage still contains collateral, the SPV Operator shall unilaterally and contractually wind down the Minter’s structure through the so-called Non-Amicable Wind Down. In case the Minter has not been de-permissioned before, i.e. if the Non-Amicable Wind Down has been triggered by exceptional conditions described below, the SPV-Operator is required to submit a governance proposal to de-permission the respective Minter. The SPV Operator shall act as a selling agent of the collateral and shall distribute all proceeds in accordance with the rules of the Adopted Guidance. More specifically, as part of the Non-Amicable Wind Down, the SPV Operator shall no longer disburse any proceeds from the sale of collateral to the Minter.

As part of a Non-Amicable Wind Down, in the case a Minter is incapable or non-cooperative of redeeming, a Minter’s set of counterparties could go directly to the SPV Operator for the successful execution of a primary redemption, provided that all core principles of the Adopted Guidance remain intact and that the appropriate contractual obligations between Minter and counterparties regulate those situations.

The SPV Operator shall exercise best effort in reaching the maximum reduction of Owed M related to the Minter part of the Non-Amicable Wind Down process by, e.g.:

• Waiting for collateral maturity while interrupting the automatic replenishment (run down the portfolio) if the market conditions require to do so, and subsequently burn such M on the Minter’s behalf.

• Selling all remaining collateral on a best effort basis and using all available proceeds to purchase M on the open market, and subsequently burn such M on the Minter’s behalf.

• Enter into contractual agreements to dispose of assets and liabilities to another Minter in the network still in the Normal Course of Business.

Should the SPV Operator, due to market conditions surrounding the purchases, have remaining M balance in its control, although the Owed M of the Minter is 0, the SPV Operator shall burn such M and increase the system-wide implicit overcollateralization. Should purchased M not be sufficient to fully bring the Owed M of the Minter to 0, such Owed M will continue to exist, effectively decreasing the Protocol-wide overcollateralization. Governance should act proactively to ensure that such a scenario will never materialize, by appropriately monitoring individual collateralization levels and/or de-permissioning Minters that constitute excessive risk for the Protocol.

In addition to Minter De-Permissioning, the Adopted Guidance considers additional circumstances that should lead immediately to a Non-Amicable Wind Down. Those circumstances are described below.