Fund Liquidation Waterfall & Investor Repayment Modeler

When an asset manager or mutual fund freezes redemptions and enters statutory liquidation—such as in recent regulatory interventions like Turkey's Tera Portföy investigation—assets cannot be disbursed on a first-come, first-served basis. Insolvency statutes enforce a strict legal ladder:

1. Super-Priority Carve-Out: Court-appointed trustees, forensic accountants, and receiver operating fees must be funded to preserve residual value.
2. Secured Creditors: Claims secured by specific pledged collateral or repurchase collateral lines must be satisfied first.
3. Preferential Claims: Statutory payroll taxes, employee wages, and sovereign regulatory fines.
4. Unsecured Creditors: Trade counterparties, brokerage operational debt, and general operational claims.
5. Subordinated / Equity Tranches: Preferred investors take priority over common and retail unitholders. If cash is exhausted at any level, all junior tranches receive zero.

Book value rarely matches liquidation value during forced liquidations. Public liquid securities often trade at a small haircut (5–15%) due to market impact of sudden volume. In contrast, private debt, unlisted notes, and real property regularly suffer severe discounts (30–65%) because distressed buyers demand wide liquidity risk premiums, and frozen assets may have disputed underlying guarantees.

Within any single priority bucket (e.g., the retail investor pool), if remaining cash is insufficient to repay the full aggregate claim, the funds are distributed pari passu (pro-rata in direct proportion to each investor's validated principal balance). Every retail claimant receives the identical percentage (cents on the dollar).