This is my GUESS:
- Jack had a bad lawyer who did not grasp the new arrangement when this Milstein dude offered to "lend" Nicklaus Co needed capital during a downturn.
- The "loan agreement" probably had a bunch of tricks and traps (or covenants) that were put in place with a "wink and a nod" that "Oh, No, we would never do THAT"...as the agreement was being signed probably a mere days before the biz wouldve gone Chapter 11.
- a good lawyer wouldve flagged this and put in some protective verbiage.
- The loan covenants were tripped and the debt converted to equity and Milstein took control and he took the keys to the company.
- In essence, Jack did become his employee.
- If Jack had a rigid spine and less of an ego, he would've let the biz crater and then start over.
Happens EVERY day at all levels of American business: restaurants, start-ups and mid-market manufacturers.
Jack got snookered and had to sign a bad deal with a bad guy or face liquidiation or insolvency.
Jack sold his soul to the devil and was probably just naive about it and thought he could trust this guy.
That's why Kirkland and Ellis and others charge the big $$....right, Sven...?...;-)
Yet another example of the "Golden Rule": He who has the gold makes the rules.