The Plot Thickens
I am going to tell a tall tale here that is, unfortunately, all too true, or as Madeline Kahn said in Blazing Saddles, “It’s Twue, it’s Twue!” As I take on my Fireside Theater/Nick Danger/Dashiell Hammett/Sam Spade persona, I can’t help but think of Woody Allen’s Manhattan Murder Mystery when he tells his wife (Diane Keaton) that if she doesn’t follow his orders to not go snooping in the neighbor’s apartment, he will simply not be forbidding her from doing things any more. That is how toothless I feel my admonitions about this mystery seem to me since I have a hard time justifying why I am involved in this at all or care enough to stay involved snooping around the edges of the affair I am about to describe to you. If that doesn’t keep you, my readers, engaged, I simply won’t be trying to keep you engaged any more.
Five years ago this month, it all started in an old prison in Istanbul. If you remember the movie, Midnight Express, it was where Billy Hayes was incarcerated in the prison near the Blue Mosque in the then gritty part of Istanbul. Someone had the touristic foresight to turn that prison into the The Four Seasons Hotel at Sultanahmet and I was having breakfast in the pleasant courtyard when my phone rang with an unknown local Istanbul number. Kim and I were taking a few days in Istanbul before heading to Athens for a motorcycle trip around Greece. There was turmoil between Turkey and the U.S. over the situation in bordering Syria and we were one of the few Americans in Istanbul at that moment. The call was from a well-respected professor of physics from the largest Turkish private technical university. He was calling to ask me to come up to his campus office in the far north part of the city, set on a hillside with a full view of the Black Sea and the Bosphorus.
I agreed to the meeting and headed north, leaving Kim to shop to her heart’s content. It turned out that the professor was not only the president of the university, but a long-time tenured professor at a top 3 university in the U.S. In other words, his credentials were impeccable. He stood there in his office pointing out to the many ships lined up to go out of the Black Sea through the Bosphorus and gave me a high degree of certainty that I simply must take the job of CEO of this little ammonia/hydrogen company that was asking me to come in to take over (the ships would one day be propelled by our innovative ammonia). Based on his strong endorsement of the technology and people, I took the bait and landed at the bottom of Manhattan in an office overlooking New York Harbor. It took me a hot second to realize that the main protagonist and majority shareholder was at least a flake and at worst a total fraud. I had more confidence in several of the other players involved that seemed to be both more reasonable and more tuned into the technology. I spent the next three years trying everything, including the pivot from ammonia to hydrogen, to make it work. I came in after $17 million had been invested and I raised an added $24 million which went down a similar rat hole as we tried and failed to make the underlying technology (that which my Turkish professor had so strongly endorsed) work. Meanwhile, the majority owner sank slowly into the muck and mire of minority ownership and eventually persona non grata status and so ran off to start a new company, funded by his big benefactor in our current fiasco.
Along the way, I introduced a long-time friend who was at loose ends, into that new situation, but did so with all the caveats appropriate. He took on a consulting role with the protagonist and after working that “very different” and “likely to succeed” situation hard for several months, found himself with no payment and a contractual right to some equity in the company and a not-insignificant senior debt obligation. I had done a similar thing and owned 6% of the first company and a considerable due bill for unpaid compensation and eventually, unpaid severance which was owed in cash under my contract when they decided (and I agreed) to step down in favor of a new Mr. Wonderful they brought in. To make a long story short, Mr. Wonderful failed even more so than I had and the company went into full shut-down with a liquidation of valuable assets and some IP that would pay off us creditors (myself and several other ex-employees) at least some of what we were owed. That was a year ago and other than an occasional email update, there is little to show for whatever was happening with the liquidation. Meanwhile, my friend was emailing his past due invoice and equity demands monthly to no avail.
The exact story of the two back and forth situations is as tortured as any you will hear in the business world and we were both taking it in stride until this week. What began as a simple and routine bi-monthly check-in and a call or two to my contacts, turned over a rock with many creepy crawlies scurrying for cover. The rock that was my friend’s burden was more spectacular in its grotesqueness than my rock.
My email inquiry was met with an almost immediate response, which was not wholly expected. It was pleasant and implied that there was a buyer for the assets at an interesting level being negotiated, but that there was a creditor demand for a full-on liquidation event that would upset the apple cart. Nevertheless, I was assured that this should be resolved by Christmas (only four months after the Labor Day resolution assurances I was given over the summer). Things were heating up nonetheless. Word from the front lines was that the investors were thinking that they had a senior secured claim that came ahead of our creditor claims, which is both incorrect and illegal (given the principle of equitable subordination, which disallows equity owners from jumping the creditor line). I was not so surprised with this tactic and felt it could be handled in due course. Meanwhile, the other rock was making some funny and smarmy movements as per some of my tangled web of interconnected contacts.
In that case, the original protagonist had supposedly come into some personal money (something he had always claimed was there as a fallback, but which never materialized). It was supposedly enough to fund the company for a while and for him to buy a house in the suburbs. But alas, it now becomes clear that there was an outside investor lured into the web, who’s money was being used for all of those purposes. The current grapevine had it that he had now lost his interest in that company and his CEO role based on a funding milestone which had not been met and gave the investors rights to his shares and his title. My friend found on LinkedIn that a man of Wall Street substance (someone LinkedIn tells me I have 394 connections to through common acquaintances) had taken over as CEO a year ago. I also heard that the investor had discovered the house purchase with their money and was rather upset. We learned the name of the investor and my friend sent an email to the new CEO and the investors.
Those investors responded quickly (not copying the CEO, a strange and purposeful act) saying they had no such investment, even though they supposedly made the investment. The immediate presumption for me is that these investors, who appear to be reputable, are now aware of the smarmy nature of their counterparty in the form of that protagonist, and have probably chosen to terminate and rip up their equity holding favoring liability cauterization to holding a hope certificate in a potentially fraudulent entity. Yikes. But not surprising from what we know of our vaunted protagonist.
Meanwhile, I have learned that the buyer of the assets of the company I am a creditor of has asked for and been given the keys to the lab, where all the valuable equipment lies. That seems like a step in the right direction, but the way things operate with this cast of characters only means that plots can thicken and thin at any moment and there should be no counting of chickens until they hatch, are butchered and perhaps even consumed.
As Nick Danger once said in Fireside Theater, “I was in my office looking at the door, wondering who this mysterious guy whose name was on the door was….REGNAD KCIN. She walked in packing a 38, then she pulled a gun….” And so it goes in the land of absurdity and make believe.