Now that we have reviewed the basics - lets finally talk turkey. If I was in the position tim was, I would have realized that it was a huge mistake taking on this convertible debt. So as to not live in the past, I would work on a way to get myself (aka IBCL) out of this mess.
How do you do this? Negotiate with Hicks. But if you want to talk hicks into not killing this company, what approach do you take? Our slow steady decline is his huge success - he benefits by a R/S and our dilution. In other words, when we lose money, he gains money.
What you need to do is make it so if he doesn't play ball, he gets nothing. Absolutely nothing. Now hicks is the guy who is also owed $1 mil in conventional financing as well as about $11 mil in converts. The converts are unsecured, but the mil is secured. That means that if he wanted to bankrupt the company, he could take things like the patents, office chairs, pencils... anything of value.
So now, If I were in Tim's position, I would find a way to hollow out the company while keeping the value of the shareholders (1. so they don't sue, and 2. cause they are the rightful owners). How in the heck do you do this? Well, to me it would look like tim has created Nova for this purpose. He is placing the assets into Nova, but the revenue potential still goes in a large part to IBCL. The shareholders of Nova benefit in several ways, but also does IBCL. Now when IBCL is sufficiently hollowed out, you refuse to increase the float so that hicks cannot get any more shares and make him take you to court to get more shares. At that point, the court most likely would rule in favor of the shareholders not to issue more shares as it is set up in the charter. Then Hicks has two options, force bankruptcy - where he gets nothing or he agrees to play fair and maybe convert his $12 mil of debt into maybe $2 mil of conventional loan guaranteed by IBCL's ownership of nova shares. He has already gotten more than his share out of the company and he needs to make a decision whether he wants more or he wants nothing.
Most companies are now doing this same kind of thing in reverse. They set up two or more corporations from the start, hold the assets in one business and do business with the others. If something goes wrong, the risk of the lawsuit is minimized. Tim IMO is working backwards to dig himself out. I personally rent my equipment to my corporation. My corp has no assets. If someone forces me into bankruptcy, they get nothing and I can start up the next week under a new name (not quite that simple, but good enuf for illustration).
Now I could be totally wrong. Tim and Hicks could be best of friends and this could be a scam as fishy and a few other suggest. If this is the case, It would seem that both are not that smart. There are much easier ways to screw the shareholders than to go to the trouble of Nova and such.
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