2 Question Discussion Post – Studypool

I’m studying for my Business Law class and need an explanation.

Question 1

  1. Bensalem Enterprises Group consists of five privately held companies. The shareholders of all of the companies are a husband and wife. The companies are each in diverse business, including IT support, real estate investments, health insurance brokerage, the importing of supplies and equipment for restaurants, and the design and manufacture of small medical devises for home use. The real estate investment company is doing poorly because of three shopping centers that it owns but which have much vacancy because customers are making so many purchases online these days and foot traffic has decreased markedly. The fair market value of the three properties has decreased significantly since their purchase 10 years ago, and all of them have always been heavily mortgaged. The first property carries a mortgage of $7.5 million and has a current fair market value of $6 million. The second property carries a mortgage of $10 million and a current fair market value of $8 million. The third property carries a mortgage of $22 million and has a fair market value of $15 million. The company also owes $3 million to a construction company who provided extensive renovations recently to one of the buildings. The company has offered the properties to the lenders in exchange for marking the mortgages and notes as satisfied, but the lenders have rejected this offer. The owners want to get out of the real estate business and they would like the real estate company to file a bankruptcy petition. (1) What possible chapters (7, 11, 13) of the Bankruptcy Code should be considered as the basis for filing a bankruptcy petition? Why? What do you believe would be the best given the desire of the owners? (2) The company is the defendant in three personal injury lawsuits involving one of the shopping centers. The claims arise out of poor maintenance of the parking lot and sidewalks. If a bankruptcy petition is filed, what will happen with respect to the progress of that pending litigation against the company?
  2. The husband of the husband/wife ownership team has run up credit card debt on eight credit cards totaling $160,000. He also has two bank loans totaling $180,000 for the Maseratis he and his wife drive. He also has federal and state income tax liens that were just filed against him because of his failure to pay the taxes for the past 4 years; these liens now total $3.5 million including interest and penalties. He personally guaranteed the three bank loans for the real estate company. Finally, the husband owes $250,000 in child support payments for his children from prior marriages; he stopped making the payments several years ago and he has argued that they were set at a time when his income was much higher and should be readjusted. The husband earns a salary of $400,000 from the various companies, and he gets regular dividend distributions of about $500,000 annually from the company making a profit. Unfortunately, he spends more than he earns. The husband is considering filing for bankruptcy. (1) What possible chapters (7, 11, 13) of the Bankruptcy Code should be considered as the basis for filing a bankruptcy petition? (2) Can the husband get out from under all of these debts? If not, which debts are not dischargeable? (3) What would be a reasonable plan that you believe would be acceptable to creditors?

Question 2

Dynamic Enterprises is a large publicly traded corporation. It is a holding company with subsidiaries in several businesses, including oil and gas exploration, the manufacture and distribution of pesticides, the distribution of broadband communication products, the manufacture and distribution of materials used to make fences, and the distribution of visual communication products for the healthcare industry. Dynamic Enterprises and its subsidiaries are overburdened by federal and state regulations and administrative claims. Notwithstanding this, all of Dynamic Enterprises’ subsidiaries have seen their profits increase each of the past five years, and a good dividend has been distributed by each of them every year. However, there have been a number of difficulties in 2019 as follows:

  • The federal Environmental Protection Agency and state Departments of Environmental Protection are claiming violations of many regulations by the companies involved in the pesticide and the oil and gas industries.
  • An unusually high number of employees in the manufacturing businesses have sustained OSHA-reportable injuries during the past five years, and OSHA has been conducting relatively frequent surprise investigations and has issued citations with increasingly high fines.
  • There have been many vigorous disputes involving the fence material manufacturer and the union who has just been successful in being approved by the employees, and the NLRB has interceded and hearings have been held with more anticipated.
  • All of the subsidiaries in the different businesses have been the subject of investigations by the EEOC and state Human Relations Commissions because of questionable employment practices.
  1. An objective person could look at the business operations of Dynamic Enterprises as being loose on compliance with federal and state regulations and focused solely on having the highest profits possible. Which of the theories of ethics and social responsibility on pages 713 – 720 of the textbook does Dynamic Enterprises seem to follow why? (You can identify more than one theory if you more than one applies.) Please explain your answer.
  2. Some new members of the Board of Directors do not like what they see about the company’s lack of compliance with many regulations and the impact that this has on the company. What different theories of ethics that represent greater social concern can they espouse? Please explain your answer.
  3. OSHA citations are issued by OSHA as part of its executive power. Dynamic Enterprises wants to challenge some recent OSHA citations. (A) What administrative procedure is going to be followed? (B) Explain the difference between substantive and procedural administrative law. (C) Who will preside over an administrative hearing, and how will the hearing proceed? (D) Is there any ability to seek further review of an Administrative Law Judge’s decision? Please explain.

 

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