I have explored the topic of promissory notes in previous articles. This analysis shall specifically concentrate on convertible promissory notes.
As a reminder, a promissory note is a written promise by a person, persons or entity to pay a specific amount of money (called “principal”) to another, usually to include a specified amount of interest on the unpaid principal amount. In addition, a promissory note will include the basic specifics of the debt, including the debtor and creditor, when payment or payments are due, interest rates, if the debt is secured, and whether the debt may be converted into stock or other equity. A promissory note that may be converted is often referred to as either a debenture or a convertible promissory note.
Notes Can Be Sold or Assigned
Unless specifically prohibited in the language of the note, a promissory note is assignable by the lender. That is, the lender can sell or assign the note to a third party