Author : @Obinna
Summary
To help manage risk for all Goldfinch tokenized loans and investments and to maximize the community’s recovery efforts in the ongoing process with Lend East, I propose that the Goldfinch community retain Ted Gavin of Gavin / Solmonese (the “Advisor”). This proposal extends GIP-65, where the community previously hired an advisor to help manage the portfolio.
Why is this Necessary?
Goldfinch needs a centralized entity to represent the interests of both the Senior Pool and Backers (collectively, the “Lenders”) when interacting with borrowers. This centralized approach will ensure:
- A single risk manager is communicating with all borrowers on behalf of Lenders.
- Borrowers comply with their obligations, including reporting, to promote transparency.
- Efficient management of the recovery process with Lend East, as well as any future recovery efforts.
About Gavin / Solmonese
Gavin / Solmonese is a leading corporate recovery and restructuring firm in the U.S. Ted Gavin, Managing Director and Founding Partner, will lead this engagement. Ted is a Certified Turnaround Professional and a Nationally Certified Professional Mediator with a wealth of experience in managing complex financial situations, including corporate bankruptcies and recovery efforts.
Ted’s experience spans business liquidations, creditor negotiations, and post-bankruptcy liquidating trusts. His previous leadership roles, including as President of the American Bankruptcy Institute (ABI), and his ability to streamline creditor-debtor communication, make him a strong fit for Goldfinch’s needs.
Ted is already familiar with the Goldfinch protocol and community, which will reduce the time needed to onboard him and his team.
Responsibilities :
As in GIP-65, by retaining the Advisor, the Lenders associated with the Borrowers authorize the Advisor to take such action on such Lender’s behalf and to exercise such powers, rights and remedies under the respective documents by and among Lender and Borrower as are granted to such Lender by the terms thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Advisor may exercise such powers, rights, and remedies and perform such duties by or through its agents, sub-agents, employees, or attorneys-in-fact. Advisor shall not have, by reason hereof or any of the other documents, a fiduciary relationship in respect of any Lender. Without limiting the foregoing, Advisor is authorized to:
- file any financing or continuation statements or record any documents or instruments in any public office at any time or times or otherwise perfect any security interest for the benefit of Lender and other secured parties;
- monitor and preserve the collateral;
- make information requests to Borrower;
- deliver notices of default and/or event of default to Borrower and negotiate forbearance agreements and waivers in connection therewith; and,
- to the extent available under applicable law and the terms of the documents, take remedial action against Borrower and the collateral such as initiating litigation, conducting foreclosures, and sweeping cash.
In addition, this Advisor will be responsible for providing regular updates to the community and will serve as the main point of contact for all Lenders regarding actions and remedies related to the Borrowers. Immediately following the approval of this proposal, this community-retained Advisor will be reaching out to the community to establish best practices for all Lender-Borrower communications going forward, including but not limited to how risk updates will be provided.
How Will This Differ from GIP-65? :
The engagement under GIP-65 fell short of expectations, but we believe this new arrangement will be significantly more effective for the following reasons:
- Experienced Firm: This time, we are engaging a reputable firm with a long track record risk management and complex recovery processes for lenders. In addition to Ted Gavin, we will have access to his team of professionals to assist with Borrower interactions and Lender communications.
- Community Oversight and Advocacy: To further ensure the community’s interests are well represented, we propose appointing community advocates to work closely with Gavin / Solmonese and facilitate direct feedback from Lenders. This will include Warbler Labs and potentially other members of the community.
Budget
Gavin / Solmonese operates on an hourly basis. Below are the estimated hourly rates for their services:
- Senior & Managing Directors: $500 to $850
- Senior Consultants & Directors: $225 to $550
- Other professional staff: $125 to $250
Based on the expected workload, we anticipate a monthly bill of around $50,000 plus potential legal fees at the onset. This could vary depending on the complexity and amount of work needed to manage risk and handle recoveries on behalf of the community, but we expect this to generally trend downwards as the Advisor gets ramped up and more familiar with the various Borrowers.
Benefits
By retaining Gavin / Solmonese, we will:
- Improve the management of Goldfinch’s portfolio of outstanding loans.
- Ensure clearer, more efficient communication between Lenders and Borrowers.
- Maximize recovery efforts related to the Lend East pool, minimizing the potential for additional losses.
Downside
The engagement is relatively costly, with estimated fees of $50,000 per month to start. However this will cover all active pools on Goldfinch, and we believe the potential benefit of better portfolio management and more effective recovery efforts outweigh the cost.
Voting
“Yes” - Retain Ted Gavin of Gavin / Solmonese and use treasury funds to compensate the Advisor.
“No” – Maintain the current portfolio management setup without engaging Gavin / Solmonese.
This proposal aims to help protect the interests of the entire Goldfinch community and promote long-term sustainability through stronger risk management and recovery processes. We encourage everyone to weigh the benefits and vote accordingly.