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If you don't pay interest on tjme you are in "default", and creditors take over the company. Old shares (stocks) are deleted, just like that. A loan is a contra
by H8crilA 7y ago
If you don't pay interest on tjme you are in "default", and creditors take over the company. Old shares (stocks) are deleted, just like that. A loan is a contractual obligations. This is like the 101 of investing, understanding what the capital structure of a company is.
Edit: ignore my comment; didn't realize the debt "leaked" through the corporate capital structure directly to the founders; I agree that investor is probably quite an asshole.
- JoshTriplett 7y agoI was asking on what grounds someone could expect a personal guarantee from individual founders, rather than a guarantee from the business that no longer exists. (Unless the terms of the convertible note are particularly horrific.) (I'm not questioning that an investor via convertible note has the ability to call the note due from the company. The specific sentence quoted in my reply regarded the expectation of personal repayment after the company was driven into bankruptcy.)
- deleted 7y ago[deleted]
- hogFeast 7y agoTwo reasons occur: personal guarantee on the note (I have no idea whether this occurs where this person lives...it isn't something I would ever do, no matter the circumstance) or fraudulent conveyance (i.e. the executives start stripping assets when the company goes into BK, afaik this is a civil action that can be brought against executives either by creditors themselves or trustees).