I have a subordinated Promissory Note that has a due date of Dec. 31st of every year. The borrower has agreed to make payments of principle and interest on this date for four (4) more years. If payment has not been received as of this date then the borrower has ten(10) days to make the payment or be in default causing a two(2) per cent penalty till the Note is paid.
I have received notice that the borrower has obtained a new loan agreement from the primary lender which was finalized in October 2002. The new amended and restated Loan Agreement contains stringent financial covenants and restrictions. One restriction requires a Funds Flow Coverage Ratio of 1.10 to 1.00. Should the borrower breach the Funds Flow Coverage Ratio, the borrower shall be prohibited from making any principle payment on Existing Subordinated Debt (that's me) until such time as failure is cured.
Would appreciate knowing my options?
I have received notice that the borrower has obtained a new loan agreement from the primary lender which was finalized in October 2002. The new amended and restated Loan Agreement contains stringent financial covenants and restrictions. One restriction requires a Funds Flow Coverage Ratio of 1.10 to 1.00. Should the borrower breach the Funds Flow Coverage Ratio, the borrower shall be prohibited from making any principle payment on Existing Subordinated Debt (that's me) until such time as failure is cured.
Would appreciate knowing my options?
