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> The transaction was financed by a lending institution that helps support alternative ownership models I guess this lending institution isn't altruistic, so t

> The transaction was financed by a lending institution that helps support alternative ownership models I guess this lending institution isn't altruistic, so the founder essentially moved control of their business to them.

lmm 3y ago
In theory the trust structure limits their control. They will presumably get repaid out of future profits, but won't be able to change the company mission (at least, as long as the company is able to keep paying what it owes them). In practice, who knows how much that will hold up. I remember Etsy adopting some kind of benefit corporation status with great fanfare, only to quietly abolish it a couple of years later.
sdenton4 3y ago
Presumably there's a business loan with a fixed contract and terms. That's a very different situation than an open ended commitment to maximally enrich shareholders... Pay your bills and the lender has nothing to say about how you run the business. Don't pay your bills, and the contract (which everyone signed) says what happens.
- nivertech 3y ago
  Simultaneously achieving two goals (supporting the local seafood industry and making a profit) is much more difficult than achieving a single goal - making a profit, so the likelihood of failure is high.
  - giomasce 3y ago
    Making profit is always a goal you achieve while doing something else: selling local seafood, writing software, designing chips, mining ores, whatever. So making profits and doing something else cannot be harder than just making profits. Also, companies receive and pay back loans all the time, it's quite a common procedure. Why should it be any different here?
    - nivertech 3y ago
      > Making profit is always a goal you achieve while doing something else: selling local seafood It's selling expensive local seafood when your competition selling cheaper imported frozen stuff. > Also, companies receive and pay back loans all the time, it's quite a common procedure. Why should it be any different here? If there was no difference, then there would be no need in inventing alternative capital formation legal structures like PPT.
      - giomasce 3y ago
        They were already selling expensive seafood before, presumably with profit, why should that have changed? I imagine for a few years part or all of their profit will go to the lender while the pay back the loan. Then it's all for them again, except they're now owned by the trust instead of by the previous shareholders. The point of having a trust is not to form capital, but to enforce a certain company governance system (as described in the legal documents with whom the trust is set up) without tying it to who happens to be the owner at any given moment.
        nivertech 3y ago
        IMO governance/voting rights are an essential part of capital formation. If you give somebody else governance/voting rights as part of the transaction - you might've created a security. That's why I mentioned capital formation. There was an SEC paper which deemed "The DAO" (the first DAO) as a security. I think most "governance tokens" also deemed as securities.
        giomasce 3y ago
        I can't know what they're doing, but it doesn't look like they're giving the lender any voting right. They're just borrowing some money and returning them in the following years. And I still can't see why this imply that the likelihood of the company failing is high.
      - sdenton4 3y ago
  - noobermin 3y ago
    You must have missed the part where the business was actually successful at this.

lmm 3y ago

In theory the trust structure limits their control. They will presumably get repaid out of future profits, but won't be able to change the company mission (at least, as long as the company is able to keep paying what it owes them). In practice, who knows how much that will hold up. I remember Etsy adopting some kind of benefit corporation status with great fanfare, only to quietly abolish it a couple of years later.

sdenton4 3y ago

Presumably there's a business loan with a fixed contract and terms. That's a very different situation than an open ended commitment to maximally enrich shareholders... Pay your bills and the lender has nothing to say about how you run the business. Don't pay your bills, and the contract (which everyone signed) says what happens.

nivertech 3y ago
Simultaneously achieving two goals (supporting the local seafood industry and making a profit) is much more difficult than achieving a single goal - making a profit, so the likelihood of failure is high.
- giomasce 3y ago
  Making profit is always a goal you achieve while doing something else: selling local seafood, writing software, designing chips, mining ores, whatever. So making profits and doing something else cannot be harder than just making profits. Also, companies receive and pay back loans all the time, it's quite a common procedure. Why should it be any different here?
  - nivertech 3y ago
    > Making profit is always a goal you achieve while doing something else: selling local seafood It's selling expensive local seafood when your competition selling cheaper imported frozen stuff. > Also, companies receive and pay back loans all the time, it's quite a common procedure. Why should it be any different here? If there was no difference, then there would be no need in inventing alternative capital formation legal structures like PPT.
    - giomasce 3y ago
      They were already selling expensive seafood before, presumably with profit, why should that have changed? I imagine for a few years part or all of their profit will go to the lender while the pay back the loan. Then it's all for them again, except they're now owned by the trust instead of by the previous shareholders. The point of having a trust is not to form capital, but to enforce a certain company governance system (as described in the legal documents with whom the trust is set up) without tying it to who happens to be the owner at any given moment.
      - nivertech 3y ago
        IMO governance/voting rights are an essential part of capital formation. If you give somebody else governance/voting rights as part of the transaction - you might've created a security. That's why I mentioned capital formation. There was an SEC paper which deemed "The DAO" (the first DAO) as a security. I think most "governance tokens" also deemed as securities.
        giomasce 3y ago
        I can't know what they're doing, but it doesn't look like they're giving the lender any voting right. They're just borrowing some money and returning them in the following years. And I still can't see why this imply that the likelihood of the company failing is high.
    - sdenton4 3y ago
- noobermin 3y ago
  You must have missed the part where the business was actually successful at this.