[Rowdee]

Do you understand the difference between creditors and stockholders? And I daresay the corporations's bylaws contains blurbs about the order of payoff at time of breaking up....said bylaws would ahve been filed with the state when incorporated.

Also, creditors, generally have their risks secured by property, $$$ etc,

[VRWC_minion]

Do you understand the difference between creditors and stockholders?

Yes I do and I have helped many distressed companies so I am fully aware of who has power and control.

Any loan document worth its salt is going to have what are called covenants. These covenants are going to give the creditor certains rights and powers under certain conditions. These conditions generally attempt to define in quatitative terms "The company is at risk of not paying us".

When those conditions are met the creditor will have remedies which are normally very broad and can include taking full control of the company.

As a practical matter, it never comes to a physical takeover. What ussually happens is the creditor is following everything very closely. I wouldn't be surprised if Citigroup didn't have staff on the premises. As things disintegrate, the owners begin renegotiating the terms of the deal. The creditor at this point has practical control. If the debtor wants a reasonable deal they will do whatever the creditor wants. If they don't they won't get a deal from the creditor.

So, in summary when the company is at risk of default the creditor controls the company.