Legal Question in Business Law in California

Investments in businesses fall into two main categories: debt and equity. "Debt" investment means the investor lends money to the business and becomes a creditor, but not an owner. At some point, depending upon the terms of the lending (or investment, if you will) agreement, the loan becomes due and payable. If the business doesn't repay voluntarily, the investor may be able to sue successfully, or, perhaps, to negotiate some kind of settlement, perhaps accepting stock (i.e. equity) or a renegotiated repayment plan. There are endless variations.

The other main kind of business investment, equity investment, means in everyday terms that the investor becomes an owner (generally, a part owner along with others). The equity investor generally gets stock in the business. As a stockholder, the investor has a right to participate in management of the business and to share in its income through dividends, but generally has no right to a fixed payment of interest and no right to eventual repayment. As an equity investor, this kind of investor must sell his/her stock to a willing buyer in order to get his/her investment back. In some rather isolated cases, the company itself may be willing to buy back the stock, but generally it has no obligation to do so.

Therefore, the answer to your question is entirely dependent upon whether your investment was debt or equity. If it were the former, you're a creditor, and your rights will depend upon the arrangements for repayment, interest, etc. you made at the time you lent the money. If on the other hand you made an equity investment, you are a co-owner, and probably (but this can vary) only hold stock, which may or may not have a market, and which you may or may not be able to sell to someone else to recoup your investment, or part of it.

Simpler answer:

If it is broke, closed, insolvent, no assets or money, bankrupt, your money is GONE, unless the principals of the business are somehow personally liable to you. Then you would look to see if they have any assets or income to justify spending money on a lawsuit, if you even have grounds for one against them. Investments are always 'risky' and require due diligence of investors to protect themselves. 90% of all new small businesses fail in the first couple years or so.

If the business is ongoing, with assets and income, you have a chance, maybe requiring suing, or other legal action if this is a debt overdue. If you 'invested' into the business and got stock, then you need to look to the ByLaws to see IF you can compel a buy back or allow a sale of your interest. If so, feel free to contact me if serious about hiring counsel to help you in this.