diff --git a/src/test/TestUSDCSellRepoToken.t.sol b/src/test/TestUSDCSellRepoToken.t.sol
index c3193e6a..bbae1946 100644
--- a/src/test/TestUSDCSellRepoToken.t.sol
+++ b/src/test/TestUSDCSellRepoToken.t.sol
@@ -139,7 +139,16 @@ contract TestUSDCSellRepoToken is Setup {
         uint256[] memory amounts = new uint256[](1);
         amounts[0] = amount1;
 
-        _sellRepoTokens(tokens, amounts, false, "");
+        _sellRepoTokens(tokens, amounts, false, true, "");
+    }
+
+    function _sell1RepoTokenNoMint(MockTermRepoToken rt1, uint256 amount1) private {
+        address[] memory tokens = new address[](1);
+        tokens[0] = address(rt1);
+        uint256[] memory amounts = new uint256[](1);
+        amounts[0] = amount1;
+
+        _sellRepoTokens(tokens, amounts, false, false, "");
     }
 
     function _sell1RepoTokenExpectRevert(MockTermRepoToken rt1, uint256 amount1, bytes memory err) private {
@@ -148,7 +157,7 @@ contract TestUSDCSellRepoToken is Setup {
         uint256[] memory amounts = new uint256[](1);
         amounts[0] = amount1;
 
-        _sellRepoTokens(tokens, amounts, true, err);
+        _sellRepoTokens(tokens, amounts, true, true, err);
     }
 
     function _sell3RepoTokens(
@@ -168,7 +177,7 @@ contract TestUSDCSellRepoToken is Setup {
         amounts[1] = amount2;
         amounts[2] = amount3;
 
-        _sellRepoTokens(tokens, amounts, false, "");
+        _sellRepoTokens(tokens, amounts, false, true, "");
     }
 
     function _sell3RepoTokensCheckHoldings() private {
@@ -183,7 +192,7 @@ contract TestUSDCSellRepoToken is Setup {
         assertEq(holdings[2], address(repoToken4Week));
     }
 
-    function _sellRepoTokens(address[] memory tokens, uint256[] memory amounts, bool expectRevert, bytes memory err) private {
+    function _sellRepoTokens(address[] memory tokens, uint256[] memory amounts, bool expectRevert, bool mintUnderlying, bytes memory err) private {
         address testUser = vm.addr(0x11111);
 
         for (uint256 i; i < tokens.length; i++) {
@@ -193,10 +202,12 @@ contract TestUSDCSellRepoToken is Setup {
             termController.setOracleRate(MockTermRepoToken(token).termRepoId(), 0.05e18);
 
             MockTermRepoToken(token).mint(testUser, amount);
-            mockUSDC.mint(
-                address(strategy), 
-                termStrategy.calculateRepoTokenPresentValue(token, 0.05e18, amount)
-            );
+            if (mintUnderlying) {
+                mockUSDC.mint(
+                    address(strategy), 
+                    termStrategy.calculateRepoTokenPresentValue(token, 0.05e18, amount)
+                );
+            }
 
             vm.startPrank(testUser);
             MockTermRepoToken(token).approve(address(strategy), type(uint256).max);
@@ -360,7 +371,7 @@ contract TestUSDCSellRepoToken is Setup {
         IERC4626(address(termStrategy)).deposit(depositAmount, testDepositor);
         vm.stopPrank();
 
-        _sell1RepoToken(repoToken2Week, 2e18);
+        _sell1RepoTokenNoMint(repoToken2Week, 2e18);
 
         address[] memory holdings = termStrategy.repoTokenHoldings();
 
@@ -385,6 +396,82 @@ contract TestUSDCSellRepoToken is Setup {
     }
 
     function testRedeemMaturedRepoTokensExternal() public {
+        // start with some initial funds
+        address testDepositor = vm.addr(0x111111);
+        uint256 depositAmount = 1000e6;
+
+        mockUSDC.mint(testDepositor, depositAmount);
+
+        vm.startPrank(testDepositor);
+        mockUSDC.approve(address(termStrategy), type(uint256).max);
+        IERC4626(address(termStrategy)).deposit(depositAmount, testDepositor);
+        vm.stopPrank();
+
+        console.log("totalLiquidBalance", termStrategy.totalLiquidBalance());
+
+        _sell1RepoTokenNoMint(repoToken2Week, 2e18);
+
+        address[] memory holdings = termStrategy.repoTokenHoldings();
+
+        assertEq(holdings.length, 1);
+
+        vm.warp(block.timestamp + 3 weeks);
+
+        console.log("totalLiquidBalance", termStrategy.totalLiquidBalance());
+        console.log("totalAssetValue", termStrategy.totalAssetValue());
+
+        // external redemption
+        repoToken2Week.mockServicer().redeemTermRepoTokens(address(termStrategy), repoToken2Week.balanceOf(address(termStrategy)));
+
+        console.log("totalLiquidBalance", termStrategy.totalLiquidBalance());
+        console.log("totalAssetValue", termStrategy.totalAssetValue());
+
+        vm.prank(keeper);
+        ITokenizedStrategy(address(termStrategy)).report();
+
+        holdings = termStrategy.repoTokenHoldings();
+
+        assertEq(holdings.length, 0);
+
+        vm.startPrank(testDepositor);
+        IERC4626(address(termStrategy)).withdraw(
+            IERC4626(address(termStrategy)).balanceOf(testDepositor),
+            testDepositor,
+            testDepositor
+        );
+        vm.stopPrank();
+    }
+
+    function testRedeemMaturedRepoTokensFailure() public {
+        // start with some initial funds
+        address testDepositor = vm.addr(0x111111);
+        uint256 depositAmount = 1000e6;
+
+        mockUSDC.mint(testDepositor, depositAmount);
+
+        vm.startPrank(testDepositor);
+        mockUSDC.approve(address(termStrategy), type(uint256).max);
+        IERC4626(address(termStrategy)).deposit(depositAmount, testDepositor);
+        vm.stopPrank();
+
+        _sell1RepoTokenNoMint(repoToken2Week, 2e18);
+
+        address[] memory holdings = termStrategy.repoTokenHoldings();
+
+        assertEq(holdings.length, 1);
+
+        vm.warp(block.timestamp + 3 weeks);
+
+        repoToken2Week.mockServicer().setRedemptionFailure(true);
+
+        vm.prank(keeper);
+        ITokenizedStrategy(address(termStrategy)).report();
+
+        holdings = termStrategy.repoTokenHoldings();
+
+        // TEST: still has 1 repo token because redemption failure
+        assertEq(holdings.length, 1);
 
+        console.log("totalAssetValue", termStrategy.totalAssetValue());
     }
 }
diff --git a/src/test/mocks/MockTermRepoServicer.sol b/src/test/mocks/MockTermRepoServicer.sol
index bb802e69..0e68ff54 100644
--- a/src/test/mocks/MockTermRepoServicer.sol
+++ b/src/test/mocks/MockTermRepoServicer.sol
@@ -7,6 +7,7 @@ import {MockTermRepoLocker} from "./MockTermRepoLocker.sol";
 
 interface IMockERC20 {
     function mint(address account, uint256 amount) external;
+    function burn(address account, uint256 amount) external;
     function decimals() external view returns (uint256);
 }
 
@@ -14,6 +15,7 @@ contract MockTermRepoServicer is ITermRepoServicer {
     ITermRepoToken internal repoToken;
     MockTermRepoLocker internal repoLocker;
     address public purchaseToken;
+    bool public redemptionFailure;
 
     constructor(ITermRepoToken _repoToken, address _purchaseToken) {
         repoToken = _repoToken;
@@ -21,14 +23,20 @@ contract MockTermRepoServicer is ITermRepoServicer {
         purchaseToken = _purchaseToken;
     }
 
+    function setRedemptionFailure(bool hasFailure) external {
+        redemptionFailure = hasFailure;
+    }
+
     function redeemTermRepoTokens(
         address redeemer,
         uint256 amountToRedeem
     ) external {
+        if (redemptionFailure) revert("redemption failured");
         uint256 amountToRedeemInAssetPrecision = 
             amountToRedeem * (10**IMockERC20(purchaseToken).decimals()) / 
             (10**IMockERC20(address(repoToken)).decimals());
         IMockERC20(purchaseToken).mint(redeemer, amountToRedeemInAssetPrecision);
+        IMockERC20(address(repoToken)).burn(redeemer, amountToRedeem);
     }
     
     function termRepoToken() external view returns (address) {
diff --git a/src/test/mocks/MockTermRepoToken.sol b/src/test/mocks/MockTermRepoToken.sol
index 98d7e1e6..31689c7f 100644
--- a/src/test/mocks/MockTermRepoToken.sol
+++ b/src/test/mocks/MockTermRepoToken.sol
@@ -18,8 +18,6 @@ contract MockTermRepoToken is ERC20, ITermRepoToken {
 
     bytes32 public termRepoId;
     RepoTokenContext internal repoTokenContext;
-    address internal repoServicer;
-    address internal collateralManager;
 
     constructor(
         bytes32 _termRepoId,
@@ -48,6 +46,10 @@ contract MockTermRepoToken is ERC20, ITermRepoToken {
     function burn(address account, uint256 amount) external {
         _burn(account, amount);
     }
+
+    function mockServicer() external returns (MockTermRepoServicer) {
+        return MockTermRepoServicer(address(repoTokenContext.termRepoServicer));
+    }
     
     function config()
         external