MBA5005 Week 4 Project

Legal and Ethical Scenarios

Select two of the scenarios provided below. Analyze the facts in the scenarios and develop appropriate arguments/resolutions and recommendations. Support your responses with appropriate cases, laws and other relevant examples by using at least one scholarly source from the SUO Library in addition to your textbook for each scenario. Do not copy the scenarios into the paper. Cite your sources in APA format on a separate page. Submit the paper to the Submissions Area by the due date assigned.

Scenario 1—Bankruptcy

Rusty Weaver, a project manager for the Tipton Machinery, filed a petition in bankruptcy under Chapter 7, seeking to discharge $75,000 in credit-card debts and $45,000 in student loans.  Weaver’s wife died and left him with two children, Paul, who attended college, and Diana, who was thirteen years old.  According to Weaver, Diana was an “elite” swimmer who practiced ten to fifteen hours a week and placed between first and third at more than thirty competitive events. Diana was homeschooled with academic achievements that were average for her grade level.  His petition showed monthly income of $5,325 and expenses of $5,200.  The expenses included annual homeschool costs of $8,200 and annual swimming expenses of $5,000.  The expenses did not include college costs for Paul, or airfare for his upcoming summer trip to Europe, and other items.  The trustee allowed monthly expenses of $4,227, with nothing for swimming, and asked the court to dismiss the petition.

• If Weaver qualified for Chapter 7, which debts would be discharged?  Which debts would not be discharged?  Why?
• Using the median income from your state, does Weaver qualify for Chapter 7?
• Should the court grant the trustee’s request?  Does Weaver have other options if the Chapter 7 petition is dismissed?

Explain your answers and support them with relevant scholarly sources.

Scenario II – Organizations and Liability

Vance Armstrong was the sole incorporator of Triathlon Training Inc., a corporation designed to operate a training center for triathletes of all ages. The business was incorporated according to Florida law in January 2015, with Armstrong as the sole director and shareholder. Armstrong contributed $20,000 of starting capital, which was just enough to make minor repairs to the property he purchased for $400,000 with a loan from the bank. The corporation had no liability insurance. On June 15, 2015, the center opened for business. Over the next few months, the corporation operated with a profit.

In July, Armstrong took a two-week vacation in France and used a check written on the company bank account to purchase his airline ticket. In September, Armstrong decided to have the pool resurfaced. Because business had slowed and the corporation’s bank account did not have sufficient funds, Armstrong wrote a personal check to cover the work. Armstrong feared he would not make enough money through the winter to turn a profit, so he decided to work a part-time job selling fitness equipment as an independent contractor for Bowflex. Armstrong used the training center’s office phone to make calls, the copy machine for copies, and the computer for searches. He made a substantial profit, which was maintained in a third bank account not associated with Triathlon Training or his personal account.

On April 1, 2016, a child with a mild learning disability drowned in the pool while training for the local children’s triathlon. The parents brought a suit for wrongful death against Triathlon Training Inc. and against Armstrong in his individual capacity as owner. At the time of the suit, the corporation had less than $2,500 in its bank account. Because of these limited funds, the child’s parents hoped to recover most of their damages directly from Armstrong, who lived in a mansion on the beach.

• Will the parents be successful in holding Triathlon Training Inc. liable for the child’s death?
• What should the parents argue in order to hold Vance Armstrong liable in his individual capacity? Will the parents prevail? Why or why not?
• How could Armstrong have protected himself against this type of potential liability?

Scenario III—Insider Trading

During a session with her doctor, Billy Mooney, Maggie Mason mentioned in confidence the imminent merger of Walgreens with Rite-Aid. Mason’s ex-husband, Gus Mason, was on the board of directors at Walgreens. Mooney communicated the information to a securities broker, Olive Green, who immediately made trades in Walgreen’s securities for her own account and for her customers’ accounts.

• Did Mooney, Maggie Mason, Gus Mason, or Olive Green engage in illegal insider trading? Explain the potential culpability of each party. Include possible civil or criminal penalties for each party.
• Was the conduct of the parties ethical?

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