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What Happens If Lofty Goes Out Of Business?
What Happens If Lofty Goes Out Of Business?

You would not lose your investment if Lofty went out of business

Max Ball avatar
Written by Max Ball
Updated over a week ago

Because your tokens represent legal ownership in the DAO LLC that owns each property, you would not lose your investment if Lofty went out of business.

If Lofty went out of business, each property DAO LLC would continue to remain in existence as a separate legal entity for property holding, tax, accounting, liability, and member ownership purposes. Regardless of what happens to Lofty AI, Inc., the assets and the Lofty tokens of an DAO LLC would remain independent and intact.

The Lofty tokens would still represent and evidence ownership of the property contained in the DAO LLC and, as such, could be transferred in the market, as needed, so long as applicable securities transfer rules are complied with.

You, therefore, remain the owner of your tokens. If there is a liquidation of Lofty AI, Inc., the DAO members would continue to use the governance program to decide on how to handle the DAO and its asset. This could include electing a full-time managing member within the DAO or the DAO can choose to continue operating in a decentralized manner. The party responsible for processing and serving the governance program will change from Lofty to Melville Law LLP.

If the DAO members vote to sell its asset, owners will recover pro-rata portions of their principal based on the net proceeds after paying for broker, title, and legal fees. Any funds left in the Maintenance Reserves and Vacancy Reserves will be disbursed to Lofty token holders as well.

To dispose of its asset, DAO members would redeem their funds back by sending their tokens to Lofty's wallet address, which will be managed by the law firm. Once the tokens are received, owners would receive funds credited back to them via ACH or Crypto. If Lofty is no longer in business, then we would not be able to purchase the tokens back and provide liquidity, so please be aware of this risk. That being said, several DAOs have already successfully sold its asset to a buyer by listing with a broker on the Multiple Listing Service.

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