Asked by Ashley Elizabeth on Jul 29, 2024
Verified
Morgan and Flynn owned a partnership business that was facing financial difficulties.The debts of the business were getting out of hand.However,neither Morgan nor Flynn wanted to close down the business and felt that,with a few changes,they could turn the business around and make a profit.Which chapter of the Bankruptcy Code should they file under? Why?
Partnership Business
A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.
Bankruptcy Code
The collection of laws and regulations that govern the process of bankruptcy, allowing individuals or entities relief from debt under specific conditions.
Financial Difficulties
Situations where an individual or organization struggles to manage and meet their financial obligations.
- Acquire knowledge about different chapters of bankruptcy and the specific scenarios they address.
- Assess the consequences of declaring bankruptcy for individuals compared to companies.
- Comprehend the strategic factors to consider when choosing a bankruptcy chapter.
Verified Answer
KM
kimish mominAug 03, 2024
Final Answer :
Morgan and Flynn should file under Chapter 11 of the Bankruptcy Code reorganization.Chapter 11 provides for businesses to reorganize their financial affairs and still remain in business.Debtors can retain control of their business as a "debtor in possession" while the debts are being reorganized.Morgan and Flynn cannot use the Chapter 13 provision because it is open to individuals only.Neither can they use Chapter 12 because it is open to family farmers only.
Learning Objectives
- Acquire knowledge about different chapters of bankruptcy and the specific scenarios they address.
- Assess the consequences of declaring bankruptcy for individuals compared to companies.
- Comprehend the strategic factors to consider when choosing a bankruptcy chapter.