Here is your answer
1. How can you use corporate debt to avoid paying taxes on stock sale?
Imagine that you are the owner of a private company. If you want to create some liquidity for yourself, you have the option of selling all your shares to a financial/strategic buyer (which means you’re going to lose control of your company), recapitalize (which again implies that your are going to lose control at some point), sell a noncore asset (but what if you don’t have any?), sell to your employees (which dosen’t create much liquidity and is risky). IN all these cases, the proceeds of the sale will be taxed. So they might not mesh well with a client who needs liquidity, dosen’t want to give control away, and also wants to avoid a large tax liability. The other option is for you do borrow money on behalf of the company, and then use the proceeds to cover your needs. This option might not be available (since nobody is going to provide you with a credit if the company is not doing well and has no collateral). In any case, on that debt the company and the owner pays no tax. So instead of selling a portion of their company and pay taxes on the proceeds of the sale, they can just secure a personal line a credit.
2. How the put option available to the lender works?
The put arrangement is created in a variety of ways. The lender wants a guarantee that the company is going to fullfil it’s promise of repaying the debt, so it might ask a company to have a letter of credit issued by a bank or inssurance for that purpose. If the company dosen’t pay it’s debt, the bank or inssrance will have to pay it.