Conversion of stock

[rexlaser]

State is California. I invested in a company through a Private Placement. The company has been in turmoil and has devalued to the point of dissolution of the business if more money is not received from another Private Placement. What they want the Investors to do is exchange their preferred stock into common stock so a Private Placement can take place. What are the advantages or disadvantages of converting from preferred to common?

 

[ALawyer]

Usually preferred is the preferable place to be. BUT as I understand it, this company will fold without more money and they can't get more money so long as any one is going to be preferred exept the new investors with the new money -- and the new money calls the shots. It is possible that if you did not agree they'd leave you alone, but also likely that the new investors will say sorry, if you don't get with the program, they won't get out the checkbook.

 

[rexlaser]

convert stock

Your advise is very helpful. Thank you.
My next question is for tax purposes, if the Company goes bankrupt, which is best to be holding the common stock or the preferred stock. Take in mind the preferred stock will have notes that are due.