What are the issues with the following scenario:

Messi and Neymar are prepared to give up a significant share of FI's ownership of the apparel operation if a reasonable deal can be made. Their thinking has been that a new company would be organized (NewCo), to which FI would transfer the apparel business in exchange for ownership and a package of other securities. Suarez would receive a substantial block of the equity, and his uncle Busquets, who has indicated a willingness to invest up to $100,000 in the venture, would receive debt securities covering his investment, as he has requested, plus an appropriate portion of the equity.

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All of these parties are reasonably sophisticated in financial matters, and recently they have been meeting on their own to try to put more specific numbers on the allocation of interests in the new corporation. Messi and Neymar first proposed that NewCo might authorize 1,000 shares of common stock with a nice low par value like $5, of which FI would receive some 550 shares, together with either (a) 1,500 shares of $100 par preferred with a cumulative annual dividend of $11.00 per share and a liquidation preference of $100 per share plus any accumulated unpaid dividends, or (b) 1000 shares of such preferred and $50,000 in 10-year notes with annual interest at 10 12%. Suarez would receive 200 shares of the common, paying a nominal price like $2 per share, but his stock would be subject to some restrictions for several years. Busquets would receive immediately $100,000 in 10-year, 10 12% notes, and somewhat later the 250 remaining authorized shares of common. The proposed delay in Busquets's receipt of common stock stems from a suggestion made to Busquets by an adviser, to the effect that it could help to validate his debt if he did not become a shareholder right away; instead, some of the debt could be made convertible into common sometime later.

All four of the parties would be directors, and Suarez would be appointed Chief Executive for a three-year term, at an annual salary close to the $75,000 figure that Suarez has indicated he would want. Messi and Neymar would continue to perform some services in the apparel operations, but on a reduced scale, and receive $15,000 each per year.