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need help please!! company debts

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kaisin
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need help please!! company debts

Postby kaisin » Wed, 28 May 2014 11:55 am

hey there, I have this problem and would like to ask the people here for some advices.

I own a pte ltd company that has been in the running for 30 years and is in partnership with X with myself holding on to 75% of the shares. Due to various factors, we ran into some debt issues (supply chain problems) and chalk up 1 million dollars worth of debts. One of the major creditor stepped in to say that they will "help" us by taking over the bank loan(and we owe them instead) and pumping in extra help to manage the company

Now the company is getting back on track and has reduced its debt by a good 30%, the creditor now says that it wants to claim 60% of the shares, and i will be holding on to 25% of the shares, with X holding onto 15%. There is no bargaining chip here as we owe them money and failing to do so, the creditor will send a lawyer's letter asking for payment and failure to do so will result in bankruptcy.

my question is

1. What are the tricky issues of offering 60%(majority) of the shares to the creditor
2. Will the debts be gone once the creditor holds on to 60% of the debt
3. If we do not agree to it and ended up bankruptcy, will it be easy to be discharged from bankruptcy?

PNGMK
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Re: need help please!! company debts

Postby PNGMK » Wed, 28 May 2014 3:22 pm

kaisin wrote:hey there, I have this problem and would like to ask the people here for some advices.

I own a pte ltd company that has been in the running for 30 years and is in partnership with X with myself holding on to 75% of the shares. Due to various factors, we ran into some debt issues (supply chain problems) and chalk up 1 million dollars worth of debts. One of the major creditor stepped in to say that they will "help" us by taking over the bank loan(and we owe them instead) and pumping in extra help to manage the company

Now the company is getting back on track and has reduced its debt by a good 30%, the creditor now says that it wants to claim 60% of the shares, and i will be holding on to 25% of the shares, with X holding onto 15%. There is no bargaining chip here as we owe them money and failing to do so, the creditor will send a lawyer's letter asking for payment and failure to do so will result in bankruptcy.

my question is

1. What are the tricky issues of offering 60%(majority) of the shares to the creditor
2. Will the debts be gone once the creditor holds on to 60% of the debt
3. If we do not agree to it and ended up bankruptcy, will it be easy to be discharged from bankruptcy?


Lord Jesus. You need professional advice, not free advice.

1. None. If you own the majority it's just a transfer.
2. That depends on the agreement you draw up. Obviously you need a lawyer here. The consideration (i.e. the equity you give up) is in return for the debt being covered. I would seek professional valuation of your company first (stock, cash, assets, good will less liabilities). You may be able to reduce the amount you give up.
3. No.

As a side issue - your other option is to pony up cash to get out of this debt situation but it depends on the agreement you initially drew up with this creditor. If he has a non negotiable option to buy shares (or convert debt to equity) you're a bit screwed.


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