Reorganization. Tracey Service Co filed a petition for a Chapter ...

[V@ndy87]

Reorganization. Tracey Service Co filed a petition for a Chapter 11 reorganization. Acar Supply Co, one of Tracey's creditors, filed a motion to convert the case to a Chapter 7 liquidation. The court found that the debtor corporation had no place of business, no inventory, no equipment, no employees, and no business phone. Should Tracey Service be permitted to reorganize under Chapter 11? Explain.

Question 2

Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. Suppose Meg, as part of her employment, pays Emile 100 per week so she may act as the go-between for car customers and financing companies, so she can get commissions from the financing companies. This kind of arrangement is known as:
 a. a general agency
  b. an agency coupled with an interest c. a universal agency
  d. a remunerative agency e. a non-gratuitous agency

[SVictor]

Answer to Question 1

Reorganization
Without a reasonable amount of assets and an operating business, there is no logic in proceeding with a Chapter 11 reorganization. Chapter 11 allows for rehabilitation when there is a reasonable likelihood that the business can be turned around. If the business is not currently operating and does not have the assets to engage in an active business, Chapter 11 is inappropriate. The court converted this case to a Chapter 7 liquidation. This case was decided before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, but the result under that act would likely have been the same.

Answer to Question 2

b

[V@ndy87]

YES! Correct, THANKS for helping me on my review

[Missbam101]

Thanks for the timely response, appreciate it