When a privately-held company has no funds legally available to pay a mandatory redemption, do the preferred holders become creditors of the company?
Insolvency for any company is a stressful period. When a private limited company enters into an insolvency situation, the directors are not only responsible to the creditors of the company. They are also responsible to the shareholders. When there are no funds to pay the preferred shareholders when their shares are redeemed, they become creditors [...]