invested in notes to a company, now they refuse to pay back after maturity

[kjc678]

Hi,

I am not sure if this forum is the right one. If it is not, please let me know where it belongs and I will post there.

I desperately need some advice to get my investment money back. In Dec 2006, I invested $30k in a callable convertible note of a small company, which is due to mature in one year, in Dec 2007. At maturity date, I have the option to convert the note into company stock at $0.50 per share. Otherwise, the company should pay back my money with interest.

During 2007, the company went public on pink sheet list. But the stock price was below $0.50 around Dec 2007. I actually bought some stocks of this company at the lower price.

When the company asked us to convert after maturity date, we replied in email saying that we want to defer the decision for a month or so.

The stock price has been lower and lower since then.

Then around May this year, I emailed twice and also sent a certified letter declining the conversion and demand to have my money back with interest. The company simply responded with a letter saying the they cannot pay me back at that time.

Recently, I have talked over the phone with the CEO several times. He just ask me to wait one more month, but refuse to promise me a pay back schedule.

According to some inside information, the company has many investors like me with the convertible note, but most of them did convert into the company stock. Only several people did not convert. Also the company should have enough money to pay back my money right now. But the situation could get worse.

Now what should I do to get my money back? Should I hire a lawyer now? what else can I do before I hire a lawyer?

The company is a Nevada corporation, but with headquarter in Indiana. I am in Texas.

Many thanks in advance.

 

[JoshDom1898]

Hire a Lawyer

You sent the certified letter with a demand for your return of principal, you've had several conversations with the CEO and he verbally stated he wasn't paying you. Breach of contract.

Hire a lawyer in whatever state the note is governed by and sue the company.

 

[kjc678]

Hire a lawyer in whatever state the note is governed by and sue the company.

Thanks a lot for the answer. "the state the note is governed by" - is it Nevada since the company is Nevada corp? Does it mean I should not hire a lawyer local to me in Texas?

Also, normally what is the lawyer's fee for this kind of cases?

Thanks again in advance.

 

[JoshDom1898]

"the state the note is governed by" - is it Nevada since the company is Nevada corp? Does it mean I should not hire a lawyer local to me in Texas?

- I don't know, it should say in the Note, if it doesn't, theoretically you can sue in any state under any jurisdiction. A note, is the same as a contract, it doesn't necessarily matter where you are, or where the other party is, you both decide on a jurisdiction and state law to govern the contract (since each state has their own laws - but generally they're all very similar).

I'd think you'd want to hire a NV lawyer since that's where the company is and that's where they did business ASSUMING the Promissory Note does not say anything as to what state law governs the contract and jurisdiction is enforced.

So the Note should say something like..."this Note is governed by the State of...." Whatever that blank is is where you need to be looking for attorneys.

Also, normally what is the lawyer's fee for this kind of cases?

You're probably looking at a retainer fee of $2,500 to up to $10,000. From there, who knows...but the $2,500 won't last too long if it gets into real litigation...more on the 10-20k side.