Thursday, November 29, 2012

Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 36

Problem Set 36, p.696

  • Incur debt? We can advise this. Agency exception only relevant to consumer creditors. How do we get more debt? Settle the lawsuit to increase our liquidated liability.
  • He wants a reorganization where he keeps his equity. But we can't do that in cramdown. We can't offer sweat labor. So we have to buy the equity post-confirmation. LaSalle says there has to be an open auction.
  • We have an offer for financing, but we have no unencumbered assets. Will the bank still lend to us?
  • §363(f) lets us sell property of the estate free and clear of liens. We sell everything, including the X-ray machines. We can liquidate for $500,000. Happy smiles can sell all these products to THE DENTIST. The bank's loan will attach to the assets after the sale. The creditors will get the same amount anyway. They get the cash proceeds of the sold items rather than the assets themselves. This is better for the creditors.
Problem Sets: Table of Contents

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