Chancery Decides Whether Investment Was Loan or Equity
In Tanyous v. Happy Child World, Inc., 2008 WL 2780357 (Del. Ch., July 17, 2008), read opinion here, the Chancery Court was called upon to make sense out of a record that was comprised of corporate documents that were in disarray as well as conflicting testimony about whether payments made by one of the parties to a start-up business were intended to purchase shares or if they were designed as loans. Very little conventional documentation was prepared and most of the documentation was conflicting. Complicating matters was the residence of the investor in the Middle East and his lack of fluency in English. The court recited in detail the extensive facts and determined that the investment was intended as a stock purchase.
Here is a prior decision in the case that was summarized.
