Elect Two Of The Listed Scenarios Below And Explain The Best

Electtwoof The Scenarios Listed Below And Explain The Best Solution Fo

Electtwoof The Scenarios Listed Below And Explain The Best Solution Fo

elect two of the scenarios listed below and explain the best solution for each. Include comments related to any ethical issues that arise. Support your responses with appropriate cases, laws and other relevant examples by using at least one scholarly source from the SUO Library in addition to your textbook for each scenario. Scenario I - Business Organizations Yolanda, Ginny, and Sara met while working for the Campus Subs in Knoxville, Tennessee. Yolanda was attending college to earn a business degree in hospitality. Ginny was attending culinary school to become a chef, and Sara was a recent graduate in sales and marketing. The three ladies decided to open their own soup and sandwich restaurant on wheels, also known as a food truck. They planned to start small with one truck but had big dreams to own a whole fleet of trucks that served a variety of foods. Yolanda took a business law class and remembers there are several forms for organizing businesses. The ladies have come to you for advice about the various forms of business organizations. Evaluate three forms of business organizations including advantages and disadvantages related to the business the ladies plan to operate. At least one of the options must be the LLC or LLP. Select a business form for the friends and defend your choice. Explain the requirements for starting that form of business in your state. Scenario 2—LLC Liability Plaintiffs Karl and Ginny Drake were injured by lead paint while living in a house owned by Riverwood Homes, LLC. The plaintiffs sued Bill Ding, a member of the LLC at the time it owned the property, alleging that he was liable for their injuries. Ding had limited involvement with the property. He has never visited the property, and neither he nor the LLC was aware that the plaintiffs were occupying the property until after the LLC acquired it. Once they realized this fact, they took legal action to have the plaintiffs removed. The applicable housing code imposes liability on any individual who "owns, holds, or controls" the title to the property. Is Ding liable for the plaintiffs' injuries? What are the policy arguments in favor of both parties? Scenario 3—Securities In 2010, after working at Regions Bank for 6 years, Noah Lott helped found Nova Capital Corporation, a venture capital firm that invested in the technology sectors. NCC went public in 2012, and Lott served as its CEO and chairman of the board. Various documents filed with the SEC stated that Lott "earned his MBA in finance from Harvard University and an undergraduate degree in management." In fact, he attended Harvard for only one year and did not graduate. After being pressured by a journalist, Lott disclosed the misrepresentation to the NCC board. The same day, the company issued a press release correcting the statement. The press responded negatively to "another CEO that lied about his resume" and speculated about "what else might not be right." On the day the press release was issued, NCC's stock price dropped from $33.58 per share to $26.40, but it fully recovered within six weeks. Shareholders sued, alleging that the misrepresentation violated section 11 of the 1933 Act, section 10(b) of the 1934 Act, and Rule 10b-5. Was Lott's lie about having a college degree material? Would your answer be the same if a CEO lied about having helped to take a company through an initial public offering and subsequent acquisition by another company and having led a pharmaceutical company from incorporation through human clinical trials and launch of a new drug? If you were a member of the NCC board, would you be comfortable keeping Lott as CEO once you learned that he had lied about having a college degree? Scenario 4 - Bankruptcy and Secured Transactions Coastal Property Restoration (CPR) periodically purchased used restaurant equipment from Slyce Pizza Company. CPR refurbishes and sells restaurant equipment to small restaurants. In December 2015, CPR purchased five used pizza ovens for $25,000. Because of the good relationship between the companies, Slyce financed the ovens for two years; however, Slyce did not obtain a perfected security interest in the ovens. In July 2016, CPR sold four of the ovens to another refurbishing company for $2,000 two days before filing bankruptcy. CPR still owes approximately $20,000 to Slyce for the ovens. Evaluate the legal and ethical issues associated with CPR's sale of the pizza ovens before filing bankruptcy. What recourse does Slyce have in recovering the monies still owed on the equipment or the remaining oven?

Paper For Above instruction

The provided scenarios present complex legal, ethical, and business management issues that require careful analysis to determine the best solutions. In this paper, two scenarios will be examined: Scenario 1 concerning the choice of business organization for Yolanda, Ginny, and Sara, and Scenario 4 addressing the sale of equipment prior to bankruptcy. Each scenario will be analyzed regarding the legal frameworks, ethical considerations, and policy implications to recommend appropriate actions.

Scenario 1: Choice of Business Organization

Yolanda, Ginny, and Sara are entrepreneurs planning to start a mobile food business. They need to choose the most suitable legal structure for their startup. Three common forms are sole proprietorship, partnership, and limited liability company (LLC). Each option offers distinct advantages and disadvantages that influence operational flexibility, liability, taxation, and regulatory compliance.

Sole Proprietorship

This is the simplest form of business where one individual owns and controls the enterprise. Its advantages include ease of formation, low start-up costs, and direct control over decision-making. However, it offers no legal separation between the owner and the business, exposing the proprietor to unlimited personal liability for business debts and legal actions (Miller & Jentz, 2019). For a food truck business involving food safety risks, unlimited liability poses significant personal financial risks.

Partnership

A partnership involves two or more individuals sharing ownership, profits, and responsibilities. It can be either general or limited. General partnerships entail shared liability for debts and obligations, which may be risky given the liability exposure similar to sole proprietorships. Limited partnerships separate liability among general and limited partners, but require more complex legal arrangements and filings (Carney & Myers, 2020). For the entrepreneurial group, partnership may facilitate shared resources, but liability remains a major concern.

Limited Liability Company (LLC)

The LLC combines the liability protection of a corporation with the tax benefits of a partnership. Members are protected from personal liability for business debts and lawsuits, which is advantageous for food trucks (Long, 2018). An LLC also offers flexible management structures and pass-through taxation, avoiding double taxation faced by corporations. For Yolanda, Ginny, and Sara, forming an LLC provides a balance of flexibility, liability protection, and tax efficiency.

Recommended Business Formation

Considering their plans, an LLC is the most suitable choice. It offers liability protection, which is crucial given the food industry’s risk profile, and flexible operational structure suitable for a small startup. Tennessee law permits LLC formation with Articles of Organization filed with the Tennessee Secretary of State, along with an operating agreement outlining management and profit-sharing arrangements (Tennessee Secretary of State, 2024). They must also obtain necessary permits and licenses for operating a food truck.

Scenario 4: Sale of Equipment Before Bankruptcy

In this scenario, CPR sells four pizza ovens shortly before filing for bankruptcy, while still owing Slyce Pizza Company approximately $20,000. The legal issues revolve around the nature of secured transactions and the rights of creditors. The ethical considerations concern the honesty and fairness of CPR's actions.

Legal Analysis

Since Slyce did not obtain a perfect security interest in the ovens, its rights as a secured creditor are limited. Under the Uniform Commercial Code (UCC), a secured creditor must perfect its security interest, typically by filing a financing statement, to establish priority over other creditors (UCC, 2024). Without this, Slyce's claim is subordinate to other claims, and CPR’s sale of ovens without paying the debt could be considered fraudulent or at least breach of duty.

CPR’s sale of the ovens just before bankruptcy can be viewed as an attempt to shield assets from creditors, which constitutes fraudulent conveyance under bankruptcy law if done with intent to hinder, delay, or defraud creditors (11 U.S. Code § 548). This could render the sale voidable by bankruptcy trustees.

Ethical Considerations

Ethically, CPR’s sale raises questions about honesty and fiduciary duty to creditors. Selling assets without settling debts or securing proper liens undermines creditors’ rights and damages trust (Bridge, 2020). Transparency and fair dealing are core ethical principles in commercial transactions, especially when insolvency is imminent.

Legal Recourse for Slyce

Slyce can initiate legal action to invalidate the sale under the theory of fraudulent transfer, seek to recover the ovens if possible, or claim damages for breach of contract. Filing a claim in bankruptcy court may also allow Slyce to prioritize its claim, especially if it can demonstrate that the sale was fraudulent or preferential (United States Bankruptcy Code, 2024).

Conclusion

Both scenarios highlight the importance of understanding legal requirements and maintaining ethical standards in business operations. For the food truck business, choosing a proper legal structure like an LLC offers protection and flexibility, while in the bankruptcy context, transparency and adherence to secured transaction laws protect creditors' rights.

References

• Carney, M. C., & Myers, T. R. (2020). Business Law Today: The Essentials. Cengage Learning.
• Long, W. (2018). Limited Liability Company Basics. Journal of Business & Finance Law, 23(2), 45-59.
• Miller, R. L., & Jentz, G. A. (2019). Business Law: Text and Cases. Cengage Learning.
• Tennessee Secretary of State. (2024). Starting an LLC in Tennessee. https://sos.tn.gov
• UCC. (2024). Uniform Commercial Code, Article 9. https://www.uniformlaws.org
• Bridge, D. (2020). Ethical Issues in Business Bankruptcy. Journal of Business Ethics, 162(3), 495-509.
• United States Bankruptcy Code. (2024). 11 U.S.C. § 548. Fraudulent transfers and obligations.
• FOODSAFE Tennessee. (2024). Food Truck Permitting and Licensing. https://tn.gov/food-safety
• SEC. (2024). Securities Exchange Act of 1934. Regulations and compliance. https://www.sec.gov
• Williams, J. F. (2021). Corporate Ethics and Governance. Oxford University Press.