Venture Capital Principals

Under California law as well as in many other states, the directors and officers of an insolvent corporation owe a fiduciary duty to creditors.  In particular those venture capital participants who have chosen to be directors can be extremely vulnerable.  

When the corporation becomes insolvent this can create numerous conflicts between the fiduciary responsibilities of a director and his/her creditor relationship with the corporation. 

A General Assignment for the Benefit of Creditors allows the investor to assign the corporation to a third party trustee for liquidation or sale. 

The benefits are

  • Minimizes or eliminates risk arising from fiduciary conflicts
  • Often produces greater recoveries for creditors and quicker sales of the insolvent corporation
  • Accomplished without the disadvantages of court supervised bankruptcy proceedings
  • Allows the insolvent business to be sold without the publicity of bankruptcy  
  • Allows the company to be sold free of unsecured debt

The Hamer Group has experience in the fiduciary duties and liabilities that arise out of lending relationships, particularly in venture capital situations.  

As the assignee we have fiduciary responsibility which may help mitigate any possible breach of duties directed at venture capital directors. 

We can liquidate or sell the corporationís assets in an orderly and business-like way.   

 

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