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2012 April 16 240 study guide 3

8 what should one do before agreeing to serve on the

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8. What should one do before agreeing to serve on the board of directors? Why? Do not agree to serve on a corporate board of directors unless you have sufficient time and energy to meet the requirements of the position. To achieve greater flexibility, when organizing a close corporation you should consider including in the charter a provision eliminating the board of directors and assigning the board’s duties to designated shareholders. 9. Who are outside directors, inside directors? Which are better for the corporation. Why? Inside directors: the director who are also officers or employees corporation. Outside directors: the directors who are not officers or employees. Outside directors who have no business contacts with corporation are unaffiliated directors. Outside directors who have business contact such as investment bankers, lawyers, or suppliers are affiliated. Mix of both because different points and experiences 10. What is the business judgment rule? Precludes imposing liability on directors and officers for honest mistakes in judgment if they act with due care, in good faith, and in a manner reasonably believed to be in the best interests of the corporation. Chapter 39 1. John wants to file for bankruptcy. What options does he have? What is the difference between these options? Chapter 7 or chapter 13 Chapter 7: liquidation or discharge debt Chapter 13: repayment 2. Jane files for bankruptcy. John is owed $50 by Jane. Jane tells John that she has filed for bankruptcy two days ago but John insists that he gets his $50 back. Is John’s behavior in violation of the law? Why? No, as soon as file online, everything stopped. 3. Laura files for bankruptcy. After the petition is filed when will Laura’s creditors have a chance to see her and examine her financial situation? Who will ask Laura about her financial situation? What happens if Laura does not answer truthfully the questions asked by the trustee? Within a reasonable time after relief is order a meeting of creditors must be held. The trustee will ask Laura.
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Petition may be dismissed, Perjuring charge. 4. Which obligations have top priority in being satisfied from the estate of the debtor? After secured claims have been satisfied, Domestic support obligation. 5. Does a debtor who files for chapter 7 lose all their personal and real property? Why? No, there’s debtor’s exemptions. 6. Becky filed for chapter 7. One of her creditors offers to let her keep her credit card with low interest if she agrees not to discharge the debt. Can Becky agree to that? What does she have to do for the debt not to be discharged? Yes, she can. But she is better nor to do so. Because she wants to have a fresh start and reaffirm debt, such as disabled people. 7. Are student loans dischargeable? Explain No, student loans unless excluding the debt from discharge would impose undue hardship.
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