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Home Q&A Forum What happens to convertible note if startup fails?

Business

Promissory Note

California

Asked on Oct 4, 2022

What happens to convertible note if startup fails?

I have a startup and am looking to raise money from investors. If we fail, are we going to be liable for anything if we raise money on a convertible note?

1 Attorney answer

Answer

Business

California

Answered 649 days ago

Michael M.

ContractsCounsel verified

Business Lawyer
Licensed in California
Free Consultation

Typically, if the business fails, the note can then not be converted or repaid. Unless you have personally guaranteed the obligation which would be unusual, the recourse would be against the entity itself.

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