LC Token Buyout

If this proposal is passed, then Wolf Works DAO will enter into an agreement with the principal owner(s) of the largest case that is currently in Liti Capital (LC)'s case portfolio.

Under this agreement, Wolf Works DAO will exchange its current holdings in LC tokens for an additional 19% ownership in that particular case. By doing so, Wolf Works DAO's total stake, in that case, will increase from its current level of 1% direct ownership to a full 20% ownership.

Case Analysis

In 2018, the claimant filed a case with a claim of $1,070,000,000 at the Hong Kong International Arbitration Centre (HKIAC). The final Arbitration decision (no appeal) is expected in 2023 or before if there is a settlement.

The Claimant

The claimant was the largest shareholder of a now liquidated manufacturing company with a $1 Billion USD sales pipeline at the time it closed its doors due to the defendant's stock purchase default. The lack of payment for shares by the respondent caused the claimant to default on financial commitment.

The Defendant

Ownership in over 100 subsidiaries and significant business with substantial assets.

Rationale

LC currently holds 20% of the largest case and two others in its portfolio. LC has a 30% stake in the "Binance Claim" case which has a maximum case claim of $100M and 30% ownership in the "Whistleblower" case which has a maximum case claim of $150M. This means that the maximum case claim between these two cases for LC is $75M.

Whenever LC decides to pay out a dividend, it is split between A shares and B shares (aka $LITI tokens). A shares will receive 20% of the "distributed profit" and the other 80% goes to the B shares. With a 63.7% ownership of LC's tokens, Wolf Works DAO would earn significantly less of the proceeds of the large case than if Wolf Works DAO owned a 20% stake in the case directly.

If passed, then Wolf Works DAO will hold a 20% stake in the largest case itself. This means that 100% of the proceeds earned from the largest case will IMMEDIATELY go to the Wolf Works DAO treasury, not an 80 / 20 split. There is an increase in transparency because we no longer have uncertainty around LC's "distributed profit" amount, LC's operating expenses, or the timing of when a dividend will happen.

Example Scenarios

The numbers used in these scenarios are solely for example purposes. Let's say that $100 was collected from the case to demonstrate the two different scenarios.

1. LC Tokens Exchanged for 19% Ownership

• If the case collected $100, then 20% ($20) would IMMEDIATELY go directly to Wolf Works DAO's treasury
• Wolf Works DAO Treasury Gains: $20
• Wolf Works DAO will NEVER withhold taxes so each $WLD holder is responsible for and will always have to file and pay their own taxes (Wolf Works DAO cannot give any tax advice)

2. Keeping LC Tokens

• If the case collected $100, then 20% ($20) would go to Liti Capital
• Liti Capital will subtract expenses and operating costs from the amount earned
• Liti Capital will determine when the dividend amount will be paid out
• For this example let's say that Liti Capital decides to distribute $18 of the $20 earned
• 35% withholding tax (Swiss law requirement) will be deducted ($18 minus 35% = $11.70)
• 20% ($2.34) goes to A shares and 80% ($9.36) goes to B shares
• Wolf Works DAO currently owns 63.7% of LC's tokens so the amount going to Wolf Works DAO's treasury would be $5.96232
• Wolf Works DAO Treasury Gains: $5.96232

Potential Uses of Additional Funds

• $WLD buybacks (see https://medium.com/@whitetails/proposal-discussion-buybacks-9c6735a42329)
• Fund more projects and companies to diversify the treasury
• Fund "pods" that further develop the Wolf Works ecosystem
• Supporting marketing initiatives and creating incentives
• Increase the liquidity pool size or create pools on other chains