What Happens if a Borrower Defaults?
Sixty missed days flip a project into default, but the path splits sharply: a Buyback partner repays your principal in full, or Maclear AG liquidates the collateral.
A default triggers after 60 days of missed payments. What comes next depends on the project type: for projects with Buyback, a third party buys out your position and repays the full loan principal under the program terms; for standard RWA projects, Maclear AG, as the Collateral Agent, starts the process of selling the collateral. The sale can take anywhere from 1 to 12 months. Any money recovered is split among investors in proportion to their shares. 8lends' track record as of May 2026: zero defaults since the platform launched on 3 March 2025.
How a default unfolds, step by step
Step 1. The first 60 days
If the borrower misses a payment, the project becomes overdue, not in default yet. Maclear AG gets in touch with the borrower and starts with a soft approach: reminders, working out a new repayment schedule, and applying any penalties written into the contract.
All interest that accrues during this overdue period still belongs to the investor, according to the smart contract.
Step 2. Default is declared (60 days overdue)
If no payments are made for 60 days straight, the project goes into default. At this point, the recovery process begins. There are two different paths, depending on the project type.
Step 3A. The Buyback path
If the project has a Buyback badge, the buyback triggers:
- A third party (the buyback partner) buys out your position.
- You receive the full loan principal in your wallet, under the program terms.
- Your position is closed and no further interest payments come your way.
- The collateral passes to the buyback partner, so you're no longer involved.
More on Buyback in What Is Buyback Protection?.
Step 3B. The standard RWA project path
If there is no Buyback, Maclear AG, as Collateral Agent, begins enforcement – the legal process of selling the collateral:
- The collateral assets are seized.
- They are then sold (equipment, real estate, inventory, accounts receivable).
- The proceeds are distributed to investors in proportion to their shares.
The whole process can take from 1 to 12 months, depending on the type of asset and the jurisdiction.
What the investor gets in each case
| Case | Loan principal | Interest accrued before default | Future interest |
|---|---|---|---|
| Borrower catches up within 60 days | 100% at maturity | Paid in full | Paid in full |
| Default, Buyback project | Full principal (position bought out) | Whatever the borrower paid before default | None |
| Default, standard RWA project | Your share of the collateral sale proceeds | Whatever the borrower paid before default | None |
What Maclear AG does when in case of default
Maclear AG is an independent Collateral Agent, a Swiss company, a member of PolyReg SRO supervised by FINMA. When a default occurs, it:
- Legally starts the foreclosure process.
- Seizes the pledged assets (the collateral agreements are already in place from the due diligence stage).
- Arranges the sale of the assets on the best possible terms.
- Splits the money among investors according to their share of the pool.
- Keeps investors updated on progress through the platform.
How much will I get back if a standard project defaults?
That depends on three things:
- The project's LTV – the lower the LTV, the bigger the safety cushion. (For example, an LTV of 50% means the collateral is worth twice the loan amount.)
- How much the collateral sells for – which can differ from the estimated value, depending on the market at the time.
- Your share of the pool – proceeds are distributed proportionally.
Possible outcomes:
- Full repayment of the principal – if the sale brings in at least as much as the loan amount.
- Partial repayment – if the asset's market price has dropped or it turns out to be less liquid than expected.
Whatever happens, you always keep any interest that had built up before the default.
Frequently Asked Questions
60 days feels like a long time. What's going on between day one and day 60?
A missed payment doesn't mean an instant default – that's just how business lending works. Payments can be late for all sorts of operational reasons: a client paid them late, a banking hiccup, a short-term cash squeeze. During this window, Maclear AG actively talks to the borrower to agree a plan, calculate any contract penalties, and find a fix. 60 days is the point where the odds of a quick recovery start looking slim.
Why wait 60 days? Why not just start selling the collateral right away?
Selling collateral is a long and expensive process (1–12 months) and often means losing value because of a rushed sale. Giving the borrower up to 60 days to get payments back on track is usually better for investors than dumping assets at a discount.
Can I sell a position in a project that's in default?
It depends on the exact terms at the time of default. Before a default is formally declared, you might be able to list the position on the Secondary Market, but buyer interest and the price you'll get may be very different from normal.
Do I keep the interest that built up before the default?
Yes. Any interest the borrower paid and that the smart contract accrued before the default stays with you. After a default, the only question is recovering the loan principal – either through collateral or buyback.
What if Maclear AG can't sell the collateral?
Maclear AG takes every legal step it can. If the sale raises less than the loan amount, investors simply receive their share of whatever was recovered – that's the core risk of lending. Collateral reduces the risk; it doesn't erase it completely.
Are the default stats real?
8lends' record as of May 2026: zero defaults since launch on 3 March 2025. That's for 8lends only. Maclear itself has had just one default since it began operating in 2022, and the principal was paid back to investors. More details are on the official website.
Does a project vanish from the platform after a default?
No. It moves to a status that reflects the recovery process. You'll still see your position in your account and get updates on how the collateral sale is going until everything is wrapped up.
See also:
Risk Disclosure: Investing on 8lends involves risk, including the possible loss of principal. The collateral sale process takes 1–12 months, and the amount actually recovered depends on market conditions and may be less than the loan amount. Past performance is no guarantee of future results. 8lends is a platform operated by CLEARCHAIN CORP, registered with FINTRAC (Canada) as a Money Services Business. Maclear AG (Switzerland), a member of PolyReg SRO supervised by FINMA, acts as the Collateral Agent. Regulatory framework as of September 2026.