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What happens to stock options in a private company?

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    What happens to stock options in a private company?

    I have a few questions about employee stock options and bankruptcy.

    Here are the relevant details:

    I currently work for a privately held company that offers employee stock options.

    I've been working there for a few years, and have vested about 80,000 options so far.

    These options are all UNEXERCISED. My cost to exercise will be 4 cents per share.

    The company is privately held, so these options cannot yet be converted into cash. It's very unlikely that the company will be acquired or IPO for at least 2 -3 years.

    I will of course declare these stock options when I file chapter 7, and my understanding is that the creditor can take these stock options if they want to.

    Here are my questions:

    1. If the creditor takes possession of unexercised options, will they have to pay the expense of exercising the options? Does my own strike price (4 cents per share) pass over to the creditor?

    2. If the creditor takes possession of unexercised options, how much time will they have to exercise the options? For employees who leave the company, there is a 3 month window. Within 3 months after you leave, you must either exercise your options, or lose them. Does this same 3 month time window pass over to the creditor?

    #2
    I have a similar issue and my lawyer listed them. He stated that they probably won't do anything with them since they have not been exercised and they are non-transferrable. The trustee would need to front the cash to exercise them and that would be highly unlikey.

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      #3
      If the creditors don't claim the options, does this mean that you get to keep them?

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        #4
        We just had our 341 11 days ago and we haven't heard anything from the trustee in regards to the stock options or other non-exempt items. Our lawyer doesn't think anything will become of the stock options since it is basically paper without value.

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