Renegotiation

The Renegotiation phase allows the Pool Manager to propose modified loan terms when circumstances change. This can happen from either the Active or Defaulted phase.

When to Renegotiate

Renegotiation is useful when:

• The borrower is struggling with payments and needs adjusted terms

• Market conditions have changed and rates need updating

• A defaulted vault can be restructured to resume payments

• The loan term needs to be extended or shortened

How It Works

1. Propose

The Pool Manager calls propose_renegotiation(caller, new_interest_rate, new_loan_term):

• The vault's previous phase (Active or Defaulted) is saved

• A RenegotiationProposal is stored with the new rate, new term, and timestamp

• The vault transitions to the Renegotiation phase

2. Approve or Reject

The Pool Manager then either approves or rejects the proposal:

If approved (approve_renegotiation):

• The vault's interest rate and loan term are updated

• The EMI is recalculated based on the outstanding principal (not the original principal)

• Payment tracking is reset: payments_made = 0, missed_payments = 0, late_fees = 0

• The next due date is set to 30 days from now

• The vault transitions back to Active

If rejected (reject_renegotiation):

• The proposal is discarded

• The vault returns to its previous phase (Active or Defaulted)

Only one renegotiation proposal can exist at a time. A new proposal cannot be created while one is pending.

Key Details

• Only the vault's Pool Manager can propose, approve, or reject renegotiations

• The EMI recalculation uses the remaining outstanding principal, not the original principal — this means the new payment schedule reflects what's actually owed

• Renegotiation from Defaulted is particularly powerful — it allows a defaulted vault to be restructured and resume active repayments

Relevant Functions

Function	Caller	Description
propose_renegotiation(caller, rate, term)	Manager	Propose new terms
approve_renegotiation(caller)	Manager	Apply new terms, recalculate EMI
reject_renegotiation(caller)	Manager	Cancel proposal, restore previous phase
get_reneg_proposal()	Anyone	View current proposal