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post #20 of (permalink) Old 03-05-2009, 07:26 AM
SteveLevin
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Location: Sunnyvale, CA
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What Musk is dancing around is that right now, if the company goes under, people holding deposits get nothing unless the company's assets are sold for more than $40 million (the recent round of funding, which is secured debt) plus any other secured debt lying around.

Unlike conventional deposits, where you would expect them to sit in a safe escrow account, for a Tesla deposit, you had to agree to allow the company to use the money for working capital -- making you an unsecured debtor in the case of bankruptcy.

And while Musk has said that he would make sure that didn't happen, he hasn't actually done anything about it. (for example, to put money equal to the existing deposits in escrow).

Steve
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