Post-2021, investors realized that massive breakup fees create perverse incentives. Why work to close a hard deal when you can collect $5 million for its failure? Many term sheets now cap breakup fees at actual expenses, not fixed bonuses.
Here is a piece summarizing the key elements of that case. ferrum capital lawsuit 2021
In the end, the Ferrum Capital lawsuit is remembered not for a landmark legal ruling, but as a grim parable for founders: Be careful who you take money from—sometimes the lender ends up owning more than just the debt. along with affiliate Brooklynn Chandler Willy
Ferrum Capital lawsuits involve allegations that owners Joshua Allen Michael Cox , along with affiliate Brooklynn Chandler Willy , operated a massive Ponzi scheme through various Lubbock-based Ferrum entities ferrum capital lawsuit 2021