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Convertible Notes Usury

King & Spalding

Southern District of California Determines That a Convertible Note With an Original Issue Discount Is Subject to California Usury...

King & Spalding on

In 2019, LGH Investments, LLC loaned $100,000 to Social Life Network, Inc., a software licensing company, in exchange for a convertible note, common stock, and stock warrant for 412,500 shares at a strike price of $0.20. The...more

Gray Reed

Could Corporate Convertible Loans be Subject to Criminal Usury Laws in New York?

Gray Reed on

In Adar Bays, LLC v. GeneSYS ID, Inc., the New York Court of Appeals (the “Court”) held that the conversion price in a convertible option could be classified as interest thereby potentially falling under the territory of New...more

Carlton Fields

Is It an Equity Investment or Usury? Second Circuit, Nostra Sponte, Certifies Two Questions to New York Court of Appeals

Carlton Fields on

On June 11, 2020, the Second Circuit Court of Appeals confronted the question whether an option in a commercial note that allows the lender to convert the remaining balance into the borrower's common stock at a 35% discount...more

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