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I have a contract with a California corporation and the

consideration are Pref shares of...
I have a contract with a California corporation and the consideration are Pref shares of the company. There are three payments; an initial payment, 2 years later and 4 year later. Paid in thirds. The first payment has been made.The contract is silent on default for the Pref shares being valueless. The company appears to be technically bankrupt. Can they issue share as consideration still? If they insist they can what are the consequence?
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Answered in 3 minutes by:
9/23/2017
TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Hi again.Since I haven't read the contract, I can only go off of what you wrote here (so keep that in mind). You stated that the contract is silent on what happens if the stock is worthless. In that situation, then the company would be meeting its requirements if it issues you the stock anyway. On the other hand, if the company is worth 10,000 times more in 4 years, the. That works to your benefit. So it sounds to me like there is a risk/reward situation here.The company can issue stock until it is dissolved.Does that answer your question(s)? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, please remember to provide a positive rating via the stars (and note that your positive rating is the only way that I'll get credit for helping you, so it is much appreciated!). Thank you. :)
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Customer reply replied 9 months ago
Thanks. There is no law on issuing stock for consideration when a company is insolvent / technically bankrupt?

That's correct. It's not something the legislature likely thought needed to be dealt with since it's a contract issue.

TJ, Esq.
TJ, Esq., Attorney
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