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Negotiating a settlement for stock buy-back

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    Negotiating a settlement for stock buy-back

    The trustee in my case offered to settle for $10K "in light of the potential value" of a third of a company's stock. The c-corp I run and co-founded was rightly listed in the petition as "debts exceed assets" and wouldn't exist if I walked away and the other shareholders wouldn't buy the stock. Also, if this stock had zero value, I'd have about a grand of free exemptions left.

    So I'm curious how you all would negotiate this. Because of a tax refund (fully covered by exemptions) I could afford to pay $2K today. As the reaffirmations for our cars said, we only have about $150 or so available each month after the 2 cars are included so there's no way I could make any decent payback plan.

    Part of me wants to just say, "No deal" and say good luck selling or auctioning it and wait for him to realize it and abandon it (or for it to fail at auction). But another part says better safe than sorry (what if it actually sells??) and just see how he responds to $2K (this is the route I'll likely take). A tiny part thinks, "Hmmm, $10K is nothing for walking away from $350K in debt."

    Our 341 continuation is tomorrow after lunch, and they just emailed the offer tonight after hours. So my guess is that'll be the subject of the continuation tomorrow.
    Last edited by ExplorerZ; 04-04-2013, 05:02 PM.
    Filed Chapter 7, January 2013. 341 Meeting, March 2013.
    Discharged as Asset Case w/ Stipulation, May 2013. Closed, May 2014.
    South Florida foreclosure: last payment, October 2012. Lis pendens, November 2013.

    #2
    There is no way to tell what your particular Trustee's appetite is for this valuation. You can always counter. Whether they will bite for $2K is another story. It's all about negotiation. You need to know what you want when you walk away.... which could include just losing the asset.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

    Comment


      #3
      Another way to look at this... You can only offer what you can afford to offer. Can you afford to offer more than what you have on hand?

      Offering more than you have on hand is tantamount to immediately getting back into debt...and doing so on the hope that what you are buying might "someday" be worth what you paid or more. That's a tough bed to sleep in.

      Offering what you have - and having that offer accepted - means you just emptied your current savings and essentially paid for what you owned all over again.

      Not offering means that you might end up with nothing but $2000 in the bank...and maybe what you already own in the stock if the Trustee abandons.

      Comment


        #4
        If I were convinced that nobody would buy the stock at any price, I'd tell the trustee to go ahead and try to sell it. But, if you do that, you have to be prepared for the possiblity that you are wrong and somebody will buy. Are you getting income from this business? If so, is it as an employee or shareholder? If you don't own stock, could you remain an employee and not lose the income? Could you go start up another business under a different name? Is there intellectual property that the corporation owns that you would not be able to use if you left? Is there future value in the corporation that makes the stock worth $2,000 to you? Or, is it worth $2,000 to not risk losing the stock? Is it worth entering into a payment plan for more than $2,000? There are many factors to consider. But, if to you, the stock is worth $2,000, you have nothing to lose by making an offer.
        LadyInTheRed is in the black!
        Filed Chap 13 April 2010. Discharged May 2015.
        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

        Comment


          #5
          Keep in mind the $2,000 is just an idea for a counter offer. The trustee is asking for $10,000.

          I'm paid as a W2 employee. The board is composed of just myself and my co-founder and no other shareholder would vote to remove us or add a stranger to the board. So yes, I could hold on to the position and salary even without any stock. I would be much more concerned if that wasn't the case.

          Any business that the co-founder and I would start after this would be in a different field and wouldn't use anything (IP or otherwise) from the original corp.

          Our lawyer is concerned that declining the offer will lead to them going after our assets, challenging valuations, etc. and cost us a lot in additional legal fees, let alone the chance of not winning objections and actually losing items.
          Filed Chapter 7, January 2013. 341 Meeting, March 2013.
          Discharged as Asset Case w/ Stipulation, May 2013. Closed, May 2014.
          South Florida foreclosure: last payment, October 2012. Lis pendens, November 2013.

          Comment


            #6
            Offer $1,000 and see how the Trustee responds. There is no way of telling what the Trustee is thinking. This is the art of negotiation. Speak with your attorney on the counteroffer and whether $1,000 would signal strongly enough, that the shares have no significant value.

            For what it's worth, the Trustee can't just go after "other" assets. Those assets would need to be non-exempt or partially expose (partially non-exempt). Otherwise, the Trustee has no authority with respect to the exempt assets since they are exempt from liquidation in the bankruptcy estate. Your attorney seems to think this is just some sort of game where the Trustee could start poking at other things. However, that depends on just where in the bankruptcy your case is at. There are only so many days that the Trustee can question (object to) a claim of exemption (30 days from 341 Meeting). I understand your attorney's concern, and it is a valid one if this particular Trustee is skittish.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

            Comment

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