You can be a 'creditor' (lender) and 'investor' (shareholder) at the same time. As a creditor (whether you own stock too or not), when a company is insolvent and has negative book value, unless you are supremely confident in the future business plan, you would want to liquidate the company. You don't want your note's residual claim to dwindle to nothing.
So unless the creditors are supremely confident, the only other real alternative is that their notes have no lien or call provisions. Olsen suckered his creditors even worse than his shareholders. I'm sure they're ready to kill him.
Anyone else have any experience in venture debt finance that can chime in here?
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