Microcap Convertible Notes & Structured Debt
Seek growth capital while managing cap table risk. We negotiate term sheets, structure protective covenants, and address high-risk convertible debt issues.
DEBT STRATEGY & PROTECTION
Raising Capital Without Destroying Shareholder Value
For microcap and OTC-listed companies, access to traditional bank loans or large-scale institutional equity is often limited. Convertible promissory notes bridge this gap, offering fast access to operating capital. However, the microcap debt market can be difficult to navigate. Many lenders offer “toxic” convertible debt—notes featuring variable conversion rates tied to your stock’s daily trading price without a “floor.” When executed, these notes create death-spiral dilution risk, pressure the stock price, and complicate future financing or market-tier objectives.
At Ishimbayev Law Firm, we represent the issuer. We help public companies secure the capital they need while helping protect their cap table. Whether you are negotiating a new financing round or trying to extract your company from existing predatory loans, we help evaluate the legal and commercial options available to the issuer.
Services
Our Microcap Debt Services Include:
Term Sheet & Note Negotiation:
Negotiating interest rates, original issue discounts (OID), conversion premiums, and maturity dates to seek commercially workable terms.
Anti-Dilution & Floor Price Structuring:
Drafting conversion mechanics, including floor prices and issuance limits where appropriate, to help manage dilution and reduce death-spiral risk.
Prepayment & Buyout Covenants:
Structuring favorable prepayment rights that allow the company to pay off the note in cash (with a reasonable premium) before the lender has the right to convert into equity.
Toxic Debt Restructuring & Workouts:
For companies already trapped by predatory lenders, we negotiate forbearance agreements, debt-to-equity restructurings, and structured buyouts intended to reduce dilution pressure and improve the company’s position.
why choose us
Why Partner with Ishimbayev Law Firm?
Spotting the Hidden Traps
High-risk lender terms are often embedded in complex formulas and default clauses. We know exactly what to look for—from hidden “leak-out” provisions and aggressive default multipliers to toxic “make-whole” triggers. We identify and negotiate these provisions before you sign where possible.
Balancing Capital Needs with Equity Preservation
We understand that you need cash to keep the lights on, but accepting excessive dilution to obtain it can create long-term problems. We work as your strategic partner, balancing the immediate need for capital with the long-term health of your capital structure.
Integrated SEC & Exchange Compliance
Issuing convertible debt triggers immediate regulatory obligations. We help integrate the financing with SEC reporting obligations, including Form 8-K analysis for material definitive agreements and review of applicable exchange or market rules regarding share issuance.
Aggressive Issuer Defense
If a lender breaches the terms of a note or attempts to force an illegal conversion, we push back. We evaluate available contractual, securities-law, and state-law arguments to protect the issuer’s position and support a negotiated resolution where possible.
FAQ
Frequently Asked Questions
What is a "Death Spiral" convertible note?
A death spiral note is a convertible loan where the conversion price is set at a discount to the current market price of the stock, without a fixed floor. As the lender converts and sells shares, the stock price drops. The lower stock price means the next conversion requires even more shares to satisfy the debt, creating a cycle of continuing dilution.
What is a "Floor Price" and why is it critical?
A floor price is a negotiated minimum price at which the debt can be converted into equity. If drafted properly, the floor price is used to calculate conversions even when the market price drops below that level, which can help limit dilution.
Can we negotiate our way out of an existing toxic note?
Yes, though it requires leverage. We often help issuers negotiate a cash buyout of the note (even if the lender technically has the right to convert) or structure a “leak-out” agreement that limits the number of shares the lender can sell into the market during a given period, which may help manage trading pressure.
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