Business Law 2 Group Problem

BULGL 319

Chapter 44 Group Questions

1. You are the owners of PDG sales and Service, Inc. 6 months ago you sold and installed solar panels and an attendant heating system on the home of Sunny Dee Light for a total cost of $25,000. (Unfortunately, despite the advice of your attorney, you did not follow through with the statutory provisions that would have allowed you to file a Construction Lien against the property upon which you did the work.)

Over the course of the last 6 months you have made repeated attempts to get payment from Sunny, but have received nothing but mumbled promises to pay you “soon.”

Your patience is wearing thin, and you sent a forceful letter to Sunny in which you stated, in no uncertain terms, that unless you received payment within 10 days you would have no option but to begin a legal proceeding against Sunny and that you would “see her in court.”

In response, you received a response from Sunny that she was consulting with a lawyer, and that the attorney was strongly advising her to file a Chapter 7 Bankruptcy proceeding. Sunny went on to say that she would rather avoid that, indicated that she was trying to work out settlements with all her creditors, and offered to pay you $5,000 in full settlement of your account; if you would not accept that she said she would file the Chapter 7 action.

The question to you, then, is what are you going to do in response to this offer? As part of your deliberations, answer the following questions:

1. With respect to Sunny, are you a secured or unsecured creditor?

2. What additional information would you like to have in making your decision?

3. If Sunny would proceed with the Chapter 7 Bankruptcy how much of the $25,000 are you likely to get?

1. William Kranich was the sole shareholder in the DuVal Financial Corporation (DFC). On November 1, 2015, Kranich filed a petition for Chapter 7, on January 6, 2016, DFC also filed a Chapter 7 petition.

Prior to starting the Chapter 7 proceedings, Kranich conveyed his personal residence in Clearwater, Florida, to DFC. The transfer was wholly without consideration. Shortly thereafter, DFC transferred the property to William Kranich Jr, Kranich’s son. This transaction was also without consideration.

The Bankruptcy Trustee sought to recover the property from the son. What do you think; will the Trustee be able to recover the property? If so, on what basis?

1. Jenny Issacs woke up on the morning of January 1, 2016, and faced an alarming fact: She was far deeper in debt than she could ever hope to pay off, and the prospects for improvement were bleak. She had three major creditors; Tom, Dick and Harry, to each of which she owed $20,000.

Jenny knew that she would soon be filing a Chapter 7 bankruptcy proceeding, and vaguely knew that in doing so she could keep certain property under exemption guidelines. She knew that she had $5,000 in cash which would not be exempt, and decided that she would use that non-exempt $5,000 to make a last payment towards her debt. Since, in Jenny’s mind, Tom and Dick were jerks, she paid the entire $5,000 to Harry on January 2, 2016.

On February 19, 2016, Jenny filed a Chapter 7 bankruptcy proceeding.

You are the Bankruptcy Trustee to whom this case has been assigned: In IRAD form, is there anything you can do regarding the payment to Harry?

1. While attending college, Barbara Barrington obtained a student loan from the New York State Higher Education Services Corporation. Barrington had depressive illnesses all her life, as had previous generations in her family. Her grandmother was institutionalized, and her mother had been on medication for years.

Barrington was discharged by her employer because she could not face the problems and stress of her job. Since that time, she had stayed home a lot, played with her dog, and slept a lot. She made little attempt to find other employment because of her depression.

Unable to pay her bills, she filed a Chapter 7 bankruptcy. An issue arose as to whether her student loan was dischargeable.

You are now the Bankruptcy Judge: Using the IRAD format, you decide if the student loan is dischargeable or not.

1. You are now the management team of Gander Mountain. I hate to be the bearer of bad news, but if you haven’t realized it, do a little researching to get a feel for how things are going for Gander at the present time, and answer the following:

1. Where is Gander Mountain headquartered?

2. How many stores does it currently have?

3. What kind of problems is Gander facing at the present time?

4. You are the management team – what kind of suggestions do you have for Gander Board of Directors at this point? Don’t rush to judgement here – take a look at the overall market in your area, how your competitors are doing, and come up with some options.