Well, simple really. The state seized X $ of assets from you and notes as such. After 6 months, they finally get to auction it off, it is now worth X + Y $. Si

Well, simple really. The state seized X $ of assets from you and notes as such. After 6 months, they finally get to auction it off, it is now worth X + Y $. Since the state seized X $ of assets, they ought to give back the Y $. They got what they wanted as they have seized X $ not X + Y $. If the assets are now worth X - Y $ (Y <= X) then nothing happens, as the state has seized the amount X from you already. They got what they wanted back then and that it is worth less is not your fault.