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Microcap & Penny Stocks : GLOW - Global Games, Inc. - Great Profit Potential !
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To: JOEY who wrote (8679)2/20/1999 12:37:00 AM
From: BigRedMan  Read Replies (1) of 8879
 
Joey, I mentioned over on RB that I thought GLOW might have the creditors by their proverbial balls. Let me explain...

Creditors have basically three choices here:

(OPTION 1) They can force GLOW into bankruptcy and go after Jamieson and Borglund et al personally. However, piercing the corporate veil is never an easy task (unless fraud is proven - remember, fraud is a "knowing and intentional misrepresentation of a material fact that is justifiably relied upon and induces harm.") Additionally, I don't think there will be much left of the $400 after the attorneys are paid off.

(OPTION 2) They can settle with GLOW by accepting stock options with a $2 strike (it is my understanding this is the essence of the proposal - don't know how many options we're talking about, though). The beauty of this plan is, it wipes out the debt for a POSSIBLE dilution of ownership (dilution is only realized if stock gets above $2 a share - I don't think current shareholders would complain about dilution if stock price got to $2)

(OPTION 3) They can force GLOW into counter-proposal (say shares --instead of options--with a holding period. Although it wouldn't immediately increase float, it would immediately dilute ownership).

HOWEVER, remember a couple things. Arrangement with creditors OUTSIDE of bankruptcy requires negotiating with each creditor individually (Bankruptcy allows dealing with creditors as classes). A creditor would have to be looney to sign up for a deal that was not all-or-nothing (involved ALL creditors).

Here's why: All creditors but XYZ company buy into the plan and forgive debt for stock or options. XYZ company pursues the company relentlessly and eventually forces them into bankruptcy. The creditors who bought into the plan are now left with expensive (and scratchy) toilet paper.

One other thing...it's still the same company. Still don't have working capital. Don't have a revenue stream. Still have a history of broken promises. Still have a pair of Garys associated with them.

Might be a temporary play, however.

GO BIG RED!!!
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