startup-costs, shares, liquidationI’ve read an article like this:
https://www.theverge.com/2017/7/6/15931080/jawbone-going-out-of-business-report
It says that Jawbone is going to carry on its liquidation proceedings. And the CEO and a lot of its staff will join a new health startup.
In this case, what’s the normal way to maintain the original shareholders’ benefit? To let them have some free shares for the new startup?
Are there any people with this kind of experience?
Thanks,
A company is an artificial “person” so you need to look at what the company itself owns. When a company liquidates, it does its best to get any remaining value for its shareholders by selling anything that remains that has value.
The old Jawbone doesn’t own its employees so they are free to go start a new company. But they can’t take other things from the old company with them unless they pay for it.
For example, it looks like the new company will use the Jawbone name. The name is a trademark owned by the old company so the new company will have to buy the trademark from the old company in order to use it. The new company may also buy software, office furniture, computers, etc. from the old company.
The old company is basically out of business so there is not much value for the shareholders of the old company to get. It is probably in the best interest of the shareholders of the old company, to liquidate it and sell whatever they can to the new company. The shareholders of the old company might receive shares of the new company in exchange for what is sold, but as a whole these shareholders likely lost money on their investment into the old company.
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