How to create a Directors’ Resolution to Issue Convertible Notes (Initial Round)
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What happens to a Convertible Note if the startup fails?
It largely depends on how the note was drafted. In cases where it is not guaranteed by any of the principles, it is taken as a regular debt. However, if the company has some money, it pays for the liabilities, and the remaining amount is distributed to the equity holders.
Most convertible notes do come with personal guarantees.
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