Coffee and More Scenario

Coffee and More Scenario

Coffee and More (Coffee), a corporation that is not publicly traded, owns and operates ten coffeehouses in Your State, U.S.A. The company has been in business for eight years. Each Coffee and More store sells gourmet coffee (brewed only), pastries, bagels, compact discs, and books. Coffee also offers Internet connections for customers to access their e-mail.

During the sixth and seventh years of business, Coffee and More showed profit and growth possibilities. However, the overall economic conditions in the market place made year eight a struggle. The price of coffee increased and there was more competition.

The product is still viable. If Coffee wants to stay in business, however, changes must be made. Otherwise, bankruptcy is looming in the future.

The corporation has assets that consist of real property (land and building that house the main coffee house and corporate headquarters), equipment, inventory, accounts receivable, modest holdings, and cash accounts. The majority of the assets are not liquid. The real property is mortgaged and used as collateral on two other secured credit transactions. There is also some unsecured debt. Liabilities include leased equipment and building leases for the other nine locations. Other debts include accounts payable, the usual overhead, as well as benefit and payroll expenses.

The owners of Coffee and More have come to you for advice. Below is a list of their questions for you to answer. Be as detailed as possible and use documented research as appropriate to support your answers. Write a 1,000 to 1,400 word response to the following questions(if your answer to a particular question is shorter than the question, I would suspect your answer isn't sufficient)(MAKE SURE THAT YOUR ANSWERS RELATE RELEVANT LEGAL CONCEPTS TO THE SPECIFIC FACTS OF THE SCENARIO).

(a) Earlier this year, Coffee and More hired a contractor to make some repairs on the corporate headquarters. Coffee received lien notices from subcontractors hired by the general contractor, stating that they had a lien on the building for the amount of their services. Coffee paid the general contractor for the completed work three months ago, but never received lien releases. Explain the types of liens involved, the reasons the liens were put in place, and what steps need to be taken to obtain the releases

(b) Coffee and More wants to take advantage of the increased value of the property they own. Explain what Coffee needs to do to be able to refinance the property. Examine the functions and applications of secured and unsecured interests. What is the priority of claims? Are there any exceptions?

(c) Coffee talked to a loan company that wanted to use a floating lien. What is a floating lien?

(d) Should Coffee consider selling coffee grounds, coffee beans, and coffee equipment in their coffeehouses? How could this be financed?

(e) Coffee wants to know about a stock offering. Is it a good option? What type of offering should Coffee use? Why? What does Coffee need to prepare? How long does it take?

(f) What about franchises? Would this be a good idea? What type of franchise? What should the franchise agreement include? What liability, if any, would Coffee have for the franchisees?

(g) If nothing else works, should Coffee and More file bankruptcy? If so, what kind? Why would Coffee use your suggestion as opposed to other forms of bankruptcy? What is the filing process?