DD Support Board and Research Team

[1manband]

"then in most cases..those short term lenders are screwed."

Except that they are not. This is a great example of the Dunning-Kruger Effect in action.

The toxic lenders are not stupid. I guarantee they are much smarter than the borrowers.

The contractual clauses in the toxic note agreements require the borrow to remain an SEC filer AND to not go delinquent.

If they do, they are automatically in default, which carries massive penalties, both in terms of monetary penalties and increased interest rates, among others.

And they agreements allow the lenders to sue. In Federal Court. And from what I have seen, they have a 100% success rate in these types of lawsuits as this is simple contract law.

It never ends up well for the company, or the shareholders. In more than one case, the Company is put out of business completely (resulting in a quick 100% loss for the shareholders) and the toxic lender ends of with all the assets.

Any microcap company STUPID enough to enter into a toxic death spiral note agreement in the first place is to stupid to understand they just are not going to outsmart the lenders. No way.