Update on Auros: 100% repayment of funds to M11 Credit pools on Maple expected over time
We are pleased to share that a successful conclusion with Auros has been reached and that a 100% repayment of funds is expected over time. We appreciate the patience and trust of all Liquidity Providers in the M11 Credit Permissioned USDC and the M11 Credit wETH pools on Maple Finance whilst we worked closely with Auros as they restructured, following FTX’s bankruptcy.
On 15 February 2023 the following events took place in both the M11 Credit Permissioned USDC and M11 Credit wETH pools:
- 55% of the outstanding debt has been repaid to the pools;
- 40% of the outstanding debt was reissued for maximum of 9 months at 8.64% interest in 3 cycles of 90 days; and
- 5% of the outstanding debt was reissued for a maximum of 90 days at 0% interest as a short term facility.
The above outcome is the result of months of productive discussions with Auros. The M11 Credit team were in constant communication and negotiations with Auros and other creditors as they worked to strengthen their balance sheet.
We are satisfied that we have been able to negotiate a position that expects a full recovery for all Liquidity Providers in our pools over the next 9 months.
Through rigorous due diligence and thorough credit analysis, we can confirm that Auros’ financial position and outlook has been reaffirmed and meets our stringent underwriting standards and that the 40% termed debt will generate a compelling yield.
With the 55% repayment now processed, Liquidity Providers can, if they choose to, request their prorated withdrawal on the Maple WebApp. Capital remaining in the pool will earn interest, and new loans this year will likely be priced higher than they were in 2022. Please reach out if you would like to learn more about how we think about managing our pools on Maple going forward.
We are more committed than ever to playing an integral role in the lending and borrowing space. The recent seismic shift in the landscape presents tremendous opportunities to apply our upgraded underwriting and monitoring framework towards attractive risk-adjusted yield opportunities. By doing so, we will be a change maker in improving industry standards.
Restructurings are part of any credit portfolio. As a credit team, we have decades of experience dealing with Non-Performing-Loans and have worked transparently and professionally in situations like these to effect positive outcomes for both creditors and borrowers. Below we detail key decisions made with the objective to provide confidence in our abilities and a look through the keyhole into how we balance the transparency and efficiency of the Maple DeFi platform, with traditional off-chain processes.
On 10 November 2022, the Auros management team took the prudent step to inform their creditor constituency it had a meaningful amount of funds stuck within FTX which had led to a situation where immediate liquidity was insufficient to satisfy all recalls from their lenders.
On 13 November 2022, 2 out of the 4 loans outstanding through our Permissioned USDC and wETH pools on Maple were due. In the light of their short-term liquidity issues caused by unprecedented circumstances, we worked together with Auros’ management on a short-term extension of these loans after securing strong financial guarantees and having extensive conversations with stakeholders.
On 24 November 2022, Auros informed us it had sought and received protection in the form of a “light touch” provisional liquidation order. This was put into place to protect creditors’ interests while management could work out an orderly restructuring plan under the supervision of a court approved advisory firm.
On 20 December 2022, in order to protect the interest of all Liquidity Providers in the affected M11 Credit Pools, we took the step of impairing all Auros loans. By taking this action the Maple protocol preemptively impaired the entire Auros exposure in each pool to ensure all Liquidity Providers were treated equally with respect to any withdrawals from the Maple platform.
The steps described above were necessary to arrive at the desired outcome of a 100% recovery of funds and ensure that the remaining exposure of the pools falls within our risk underwriting parameters.
We want to express our gratitude to all affected Liquidity Providers for their patience and trust during this restructuring process, as well as the team at Auros for their professionalism and hard work over the last months during this challenging period. And last but not least a big thank you to our partners at Maple for establishing a robust legal infrastructure and their technical support in facilitating the repayment and re-issuance of loans.
Taking all of the above into consideration we can only conclude it is even more unfortunate and unforgiving that Orthogonal Trading did not take similar action and engage in active dialogue when facing their own liquidity issues in the wake of FTX. Kroll, the court-appointed liquidators for Orthogonal Trading, are currently gathering information to verify assets. The purpose of this exercise is to maximize the assets available for recovery by Orthogonal Trading’s creditors, which of course includes the Liquidity Providers in the relevant M11 Credit Pools.
