Scenario 1 – Business Organizations
Andrews and Brown are the current owners [Coffee Shop Name]They are now considering changing the legal form of their business to accommodate growth. There are three types of business organisations they may consider:
- Partnership: Two or more people share in the management and ownership of the company. There are advantages to sharing management and financial contribution, but there is also the possibility of disagreements between partners.
- Limited Liability Company (LLC), also known as a Limited Liability Partnership, is a mix between a corporation and partnership. The LLC offers personal asset protection like a corporation, but allows for passing-through taxation just as a partnership. The advantages include flexibility and personal asset protection, as well as management flexibility. However, there are potential disadvantages such increased compliance and higher taxes.
- Corporation: A corporation can be described as a legal entity that is separate from its owners. There are many advantages to this arrangement, including personal asset protection and the possibility of raising capital via stock issuance. The downsides are increased compliance and double taxation.
An LLC is Andrews’ and Brown’s best bet based on what they have provided. An LLC would give them personal wealth protection as well as pass-through taxation. This would also be beneficial to their business.
Scenario 2 – Employment Discrimination
Juanita Mendoza, a cook and waitress, applied for a shift manager’s job with [Restaurant Name] However, she wasn’t hired. It is possible that the hiring decision was influenced by her accent. Possible reasons to file a discrimination suit against [Restaurant Name] include:
- National origin discrimination: Mendoza’s accent may be considered a characteristic of her national origin, and discrimination based on national origin is prohibited by Title VII of the Civil Rights Act of 1964.
- Retaliation: Mendoza could have been retaliated against if he had complained of discrimination in the past or taken part in an investigation.
[Restaurant Name] Mendoza could be argued that Mendoza wasn’t hired due to her lack of managerial experience. She could also claim that Mendoza’s accent was not an obstacle to her communication with other people and did not influence their decision-making.
The argument against discrimination might be weaker if the restaurant employed only 12 employees. This is because the establishment would not fall within the definition of Title VII of Title VII of Title VII of Title VII of Title VII of Title VII of Title VII of Title VII of Title VII of Title VII of Title VI of the Civil Rights Act of 1964.
Scenario 3 – Secured Transactions and Bankruptcy
Bayside Restaurant Supplies sells equipment [Restaurant Name] A security interest was held in the equipment. You can cancel your security interest in the equipment. [Restaurant Name] files for bankruptcy 18 months after purchasing the equipment, Bayside’s rights as a creditor would depend on the type of bankruptcy filed. Bayside will likely lose their equipment in a Chapter 7 bankruptcy and cannot collect the rest of the debt. Bayside may have an opportunity to present a plan of reorganization for the debt in Chapter 11. They might also be allowed to keep their security interest.
If [Restaurant Name] Bayside could argue that Bayside fraudulently sold the 5 coffeemakers and 2 refrigerators at $750 each, approximately 30 days before filing for bankruptcy. [Restaurant Name] The equipment was not sold to satisfy the debt. The outcome of the case would hinge on how the equipment was sold and whether creditors can prove that it was done with intent to defraud.