Comments on: What happens to the convertible promissory note if the maturity date is reached and there hasn’t been a financing? http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/ Venture capital, seed financings, convertible note bridge debt, M&A, option vesting and other matters explained for founders and entrepreneurs Thu, 11 Mar 2010 09:37:25 +0000 http://wordpress.org/?v=2.9 hourly 1 By: Yokum http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-2958 Yokum Mon, 16 Nov 2009 08:12:04 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-2958 @dhillcrest - please consult with your own attorney. There is a lot more documentation to an LLC than what you describe. @dhillcrest – please consult with your own attorney. There is a lot more documentation to an LLC than what you describe.

]]> By: Yokum http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-2925 Yokum Mon, 16 Nov 2009 01:12:04 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-2925 @dhillcrest - please consult with your own attorney. There is a lot more documentation to an LLC than what you describe. @dhillcrest – please consult with your own attorney. There is a lot more documentation to an LLC than what you describe.

]]> By: dhillcrest http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-2920 dhillcrest Tue, 10 Nov 2009 18:39:48 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-2920 We have two LLC's. One we would like to close but has two investors. Is it possible to offer to those investors to transfer their shares to our other company? Or do we just close and tell those investors they have lost their money? We have two LLC's. One we would like to close but has two investors. Is it possible to offer to those investors to transfer their shares to our other company? Or do we just close and tell those investors they have lost their money?

]]> By: dhillcrest http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-2919 dhillcrest Tue, 10 Nov 2009 18:35:22 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-2919 We have investors in our LLC who's Promissory Convertible note is due. We have pre-negotiated to convert the note into member units upon maturity date. I have Unit Certificates. Do I just fill it out and send it off to them? Or is there some other paperwork? We have investors in our LLC who's Promissory Convertible note is due. We have pre-negotiated to convert the note into member units upon maturity date. I have Unit Certificates. Do I just fill it out and send it off to them? Or is there some other paperwork?

]]> By: Yokum http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-918 Yokum Thu, 11 Sep 2008 06:23:43 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-918 @Xavier - It depends on what the document says. You need to consult with counsel. Many bridge loans are silent in this situation, which may be beneficial to the company. @Xavier – It depends on what the document says. You need to consult with counsel. Many bridge loans are silent in this situation, which may be beneficial to the company.

]]> By: Xavier http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-917 Xavier Thu, 11 Sep 2008 03:32:36 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-917 Yokum, thanks for the great advice. I'm wondering if you can elaborate on my special case. I have a case where the maturity date is reached and the note contains a clause that says that if the company doesn't pay the full amount + interest 10 days thereafter then it constitutes an Event of Default. Since then I have an offer to have the company purchased. I have spent quite a bit of time in pulling this deal together. What happens in this case? Can I convert the investor into shares of the acquirer as the note stipulates? They haven't yet pushed a court to start bankruptcy filings so is this a possibility? I have an unfriendly investor who wants to take full ownership of the company and get the full benefits of the acquisition. Do we have a leg to stand on? Yokum, thanks for the great advice. I’m wondering if you can elaborate on my special case.

I have a case where the maturity date is reached and the note contains a clause that says that if the company doesn’t pay the full amount + interest 10 days thereafter then it constitutes an Event of Default.

Since then I have an offer to have the company purchased. I have spent quite a bit of time in pulling this deal together. What happens in this case? Can I convert the investor into shares of the acquirer as the note stipulates? They haven’t yet pushed a court to start bankruptcy filings so is this a possibility?

I have an unfriendly investor who wants to take full ownership of the company and get the full benefits of the acquisition. Do we have a leg to stand on?

]]> By: Yokum http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-362 Yokum Tue, 30 Oct 2007 08:12:03 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-362 See http://www.startupcompanylawyer.com/2007/05/01/what-happens-if-the-company-is-sold-after-the-convertible-bridge-note-is-issued-and-before-the-maturity-date-or-the-next-round-of-financing/ See http://www.startupcompanylawyer.com/2007/05/01/what-happens-if-the-company-is-sold-after-the-convertible-bridge-note-is-issued-and-before-the-maturity-date-or-the-next-round-of-financing/

]]> By: Jason http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-361 Jason Sat, 27 Oct 2007 15:04:08 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-361 If the Company becomes highly successful quickly and opts not to raise Series A financing, what terms can be provisioned to duly reward Note investors for the risk? If the Company becomes highly successful quickly and opts not to raise Series A financing, what terms can be provisioned to duly reward Note investors for the risk?

]]> By: Yokum http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-360 Yokum Sat, 27 Oct 2007 05:21:51 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-360 You need to amend the articles (certificate) of incorporation to authorize additional shares of Series A and common stock (for conversion of the Series A), if necessary. The conversion price (or amount of discount, if any) is subject to negotiation. If the company cannot get stockholder approval to amend the articles (certificate), then you have a problem. You need to amend the articles (certificate) of incorporation to authorize additional shares of Series A and common stock (for conversion of the Series A), if necessary. The conversion price (or amount of discount, if any) is subject to negotiation. If the company cannot get stockholder approval to amend the articles (certificate), then you have a problem.

]]> By: John http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/comment-page-1/#comment-359 John Fri, 26 Oct 2007 21:31:23 +0000 http://www.startupcompanylawyer.com/2007/04/29/what-happens-to-the-convertible-promissory-note-if-the-maturity-date-is-reached-and-there-hasnt-been-a-financing/#comment-359 Yokum, you have put together an excellent resource, thank you. Quick question: once the Company has closed the Series A, 3 months later the Company finalizes a Bridge Loan, but the Series B never happens. What are the technicalities involved in converting the Note into Series A? Do you simply amend your articles to allow for more shares of Series A and issue the amount at the same Series A share price that you had 15 months ago? What if the COmpany cannot obtain Shareholder approval for the amendment of the Articles? Yokum, you have put together an excellent resource, thank you.

Quick question: once the Company has closed the Series A, 3 months later the Company finalizes a Bridge Loan, but the Series B never happens. What are the technicalities involved in converting the Note into Series A? Do you simply amend your articles to allow for more shares of Series A and issue the amount at the same Series A share price that you had 15 months ago? What if the COmpany cannot obtain Shareholder approval for the amendment of the Articles?

]]>