Ask HN: Defunct Startup, how to deal with investor, how to wind down?

2 points by nakedgrape 8y ago ↗ HN

I ran a US company and due to unforeseen circumstances, I was unable to return the country to raise an additional round of funding and the company collapsed.

There is currently one angel investor at $150k, some debt holders ~$10k.

I called the investor a year ago and said to him that I want to close down the company -- all the employees have left. We agreed that he'd try to solicit around the company to his contacts and try to get a sale.

I helped to pitch over the phone a once and did maintenance when here and there, and he's mentioned several people he's shown it to but never any reply.

I told him I was going back to school and need him to take over the AWS charges, which he did. I forgot to ask him to take over the domain fees and database charges and have been carrying them myself (student loan).

The company hasn't paid any taxes since its inception (I read online that I don't need to if the company is running a loss every year). I haven't filed a statement of information for a year now, and I'm effectively locked out of the country. The company bank SVB closed the company account due to inactivity.

The investor's lawyer did most of the paper work to get the company up and running. He has most of the documents, and I don't really know how this works. Unfortunately, I couldn't pay his last legal bill.

The fund holding the $10K debt has gone silent on me, and I've been afraid to bring anything up.

Recently AWS suspended the account due to overdue payment. I contacted the investor two weeks ago, and he said he'll take care of it. A week later I noticed it's still not fixed, so I contacted him again, asked if he was tabling things, and that if he was, perhaps I could also pause my payment on the DB (bringing it up the first time). No response for a week.

Anyway, what do I do here? Am I at risk for anything?

1 comment

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siegel 8y ago ↗

Am I correct in assuming you are not a US citizen nor do you have assets in the US? But the investor and debt holders are in the US? If all of this is true, effectively, I have a hard time imagining anyone pursuing you legally. Just too expensive.

There are a lot of other questions that come into play here - for example, is the angel investor a shareholder or do they have some sort of convertible security?

Startups go out of business all the time - the vast majority do. Your investor should know that, as should you debt holders.

This should be a simple process, but it seems like it's been dragged out way beyond what you should have to do with.

I'm a bit nervous that the investor's lawyers did your corporate documentation and you don't have it. I'm concerned that you may have been taken advantage of.

I would write the investor's lawyer and request copies of the documentation. He cannot withhold it because you didn't pay some legal bill.

If you want to take the risk, just send the investor a notice that you are quitting any position you have (director/officer/employee) of the company. And then just forget the whole thing.

If you want to mitigate risk, I'd find a lawyer who works with startups who can hopefully help you navigate this in a cost-efficient way.