If you haven’t already, read the Overview for the module, do the reading assignments, and listen to the presentation/lectures. Answers can be found in the text and lectures.
Please use bullet points if appropriate. For example, if a question asks for three things, use this format to answer –
1. First point.
2. Second point.
3. Third point.
Question #1 (5 points):
Max set up Max’s Sandwich Shop as a sole proprietorship. He owes a total $400,000 to ten different creditors. His assets are down to $100,000 and he is losing money on the shop. He decides to file for bankruptcy.
1. In bullet point form, list the three main purposes (or specific goals) of the federal Bankruptcy Code and how these goals will impact Max and his creditors.
2. What are your thoughts on the Bankruptcy Code? What are the advantages and disadvantages of the Code? (There is no right answer to part 2. I want you to use your critical thinking.)
Question #2 (5 points):
Leah has filed for bankruptcy under Chapter 13.
1. Which group or individual has the authority to confirm or reject her plan of payment; and
2. List in bullet point form, the factors that the court will consider when deciding whether to approve her repayment plan.
3. What are the advantages and disadvantages of Chapter 13 for Leah?
Question #3 (5 points):
Insurance policies often contain a covenant of good faith and fair dealing. Even if the clause is not in the policy, often courts will imply it.
1. List in bullet point form, the ways that an insurer may violate this covenant; and
2. Provide a fact situation for each way that illustrates how an insurance company might breach this covenant (do NOT use those already in the text).
3. Have you, or a friend or family member, ever had dealings with an insurer? Explain the situation. Did they comply with the covenant?