Deal Structure
The Standing Gap
Also known as: Enforcement gap, standing problem
TO-original framework. The gap between the right to receive money and the right to demand it. Holding a note and having the legal standing to enforce it are two different positions.
WHY IT MATTERS
Introduced in D.5 (Seller Notes That Aren't Really Yours). The right to receive money and the right to demand money are two different legal positions. When a seller note is held through an intermediate entity, the entity has legal standing to enforce collection. The individual founder has a claim to their share of the proceeds but no mechanism to act on it independently. In the Crossfield deal, Dan had $15M in notes with his name nowhere on the enforcement line. His only path to that money ran through a co-founder who worked for the buyer and had every incentive not to push for payment.