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there are note buyers out there, but do not expect 100% return. it’s gonna be discounted. i don’t think the subordinations are that big a deal, but they need to be read through. do they prevent all payments, principal payments, etc. the collateral has likely depreciated significantly, so that, combined with payer history will determine a lot.
Thanks for your feedback. The subordination agreement prevents principle payment, but not monthly interest payments. Principal payments must be ok'd with those who the document was subordinated for. I don't expect to get near 100%, but am looking at options for now. Payer history is current with interest payment so far.
so, in the back of your mind you need to say “what will i get on the dollar here” .60, .50? theory is if you or someone else needs to liquidate the collateral, what will sell it for and to who and how? will a buyer want to perform due diligence? will you need a non disclosure and sharing agreement to be executed? when does that note mature? that could be a key cause a buyer may be able to get out in full by not renewing.skycriesmary said:
There a good chance this would be valued as unsecured debt. It’s subordinated, and manufacturing equipment could have very little or no value depending on the circumstances.
This is the answer, they are most likely behind secured debt which makes the equipment worthless. Do you know what the capital structure currently is (is there senior debt)? Next you would need to look at the credit quality of the company. Would they be able to take you out either with new debt or with traditional bank debt? Honestly there probably is a deep discount to sell the note in a secondary market.
