Pervasip owes (will owe) $17M to another lender, that's how. Plus the monthly interest payment they aren't making.
A company in default of its loans is very similar to a bankrupt company. The lender can effectively reposses the company in default, and can claim any assets of sufficient value to cover the loan. In the present case, NetCapital is more likely to negociate a controling interest, against a part of the loan. Say, request 50 million shares, against reducing the debt by $10 million.
Here is how Investopedia describe a Default:
Default
What Does Default Mean? 1. The failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt.
Example:
1. Defaulting on a debt obligation can place a company or individual in financial trouble. The lender will see a default as a sign that the borrower is not likely to make future payments. For example, if Company XYZ is unable to make a coupon payment on its bonds, the bondholders would place XYZ in bankruptcy. This would give the company an opportunity to claim XYZ's assets as a form of repayment for the debt.
In any case, NetCapital will probably have to invest directly in VoxCorp to prevent the upcoming bankruptcy and a disruption of service. NetCapital could invest, say, $1M and receive 20 million shares. Or, invest $500K and reduce the debt by $5M, and receive 40 million shares.
Current shareholders have very little say in the process. Besides, the CEO and the CTO together own nearly 50% of the company, or will certainly own 50% when their warrants vest, at $0.10
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