Interesting problem to have.
Steve has legal commitments to people that bought trees. The trees are likely not going to produce anywhere close to what he projected as investments. The land is committed for the next 15-25 years and is potentially very valuable now.
I don't think we have enough information to really understand the ramifications here. This is 100% hypothetical, but if you're right and the land is growing significantly in value, here are some thoughts about how things might be:
- Steve can't sell now without getting people to let him break the contracts - who would buy to continue as agent for the tree business? Anyone who bought would want to use the land for other purposes. For people to allow breaking contracts would probably require a significant concession from him.
- Even if he could sell now, even if he divided up the cash, people probably wouldn't get much more than their initial investment back. I don't know how it would work legally.
- If Steve can keep the business running and fulfill his commitments, people get whatever they get for the lumber as commitments are fulfilled and Steve is a rich man when he can sell the land
- If Steve can't keep the business running, what happens? TATF goes bankrupt, land is sold, TATF is probably sued and I imagine a judgment eventually rendered against whatever proceeds come from the land sale. I don't know what Steve would end up with but it would probably be less. He wouldn't be in control of the outcome.
- If Steve could sell some land today and finance the business, I would think it would be in his best interest.
- Interesting situation - Steve has no cash and millions of dollars in land that he can't sell. But shouldn't he be able to get a loan based on the land value?
