Consider the following cases on Bankruptcy and Reorganization.
In March 1988, Daniel E. Beren, John M. Elliot, and Edward, F. Mannino formed Walnut Street Four, a general partnership, to purchase and renovate an office building in Harrisburg, Pennsylvania. They borrowed more than $200,000 from Hamilton Bank to purchase the building and begin renovation. Disagreements among the partners arose when the renovation costs exceeded their estimates. When Beren was unable to obtain assistance from Elliot and Mannino regarding obtaining additional financing, the partnership quit paying its debts. Beren filed an involuntary petition to place the partnership into Chapter 7 Bankruptcy. The other partners objected to the bankruptcy filing. At the time of the filing, the partnership owed debts of more than $380,000 and had approximately $550 in the partnership bank account.
1.Should the petition for involuntary bankruptcy be granted? Explain.
Plan of Reorganization
Richard P. Friese (Debtor) filed a voluntary petition for Chapter 11 bankruptcy. In May 1989, Debtor filed a plan of reorganization that divided his creditors into three classes. The first class, administrative creditors, were to be paid in full. The second class, unsecured creditors, were to receive 50% on their claims. The IRS was the third class. It was to receive $20,000 on confirmation and the balance in future payments. No creditors voted to accept the plan. The unsecured creditors are impaired because their legal, equitable, and contractual rights are being altered.
2.Can the bankruptcy court confirm the debtor's plan of reorganization? Explain.© BrainMass Inc. brainmass.com October 9, 2019, 6:56 pm ad1c9bdddf
1. The position cannot be approved as presented because of the basis of partnership law. A partnership is not a separate legal entity under the law and therefore could not file a petition as presented. A partnership is a flow through entity which reports separately but who liabilities have recourse back to the partners. The individual(s) would have to file Chapter 7 separately, and each would be wholly or ...
In close to 300 words, the two bankruptcy scenarios are analyzed with expected conclusions in both cases together with explanation leading to the conclusions.