R8 - Business Law: Part 2 Flashcards
What does an automatic stay means under a Chapter 7 or 11 bankruptcy?
When a bankruptcy petition is filed in either a voluntary case or an involuntary case, an automatic stay becomes effective against most creditors
What are the four major benefit programs the federal social security system has?
- (OASI) old age and survivor insurance
- (DI) Disability insurance
- Medicare
- (SSI) supplemental security income
What are preemptive rights?
It gives existing shareholders the ability to buy newly issued stock sufficient to mantain the shareholder’s proportionate share of rights in the newly issued shares.
When can creditors file an involuntary petition under chapter 7 Bankruptcy?
One or more creditors are owed at least $18,600 of unsecured debt (fewer than 12 creditors)
1. fewer than 12 creditors: if a debtor has fewer than 12 creditors, any one or more creditors are owed at least $18,600 in unsecured bedt may file.
2. 12 or more creditors: if a debtor has 12 or more creditors, at least 3 creditors who are owed at least $18,600 in aggregate, in unsecured, undisputed debt must join in the involuntary petition.
How are taxes payable uner the Federal Unemployment Tax Act (FUTA) treated?
They are deductible by the employer as a business expense for federal income tax purposes.
Who does the penalty for aiding and abetting understatement of tax liability applies?
The penalty for aiding and abetting applies to any person, not only tax return preparers. The IRS has the burden of proof to establish that any person is liable for civil penalty.
What are the results of the court’s final drecree in a Chapter 11 of the Bankruptcy Code?
The final decree results in a discharge of all debts and liabilities that arouse before confirmation of the plan, except as otherwise provided in the plan, the order of confirmation, or the Bankruptcy code.
Does Chapter 15 prohibits discrimination against foreign creditors?
Chapter 15 prohibits discrimination against foreign creditors (except certain foreign government and tax claims, which may be governed by treaty).
When an employee has a job-related injury, who is at fault under the unemployment compensation law?
Employers are strictly liable ragardless of fault. The only requirement is that the employee’s injury occured while acting in the scope of employment.
An employee can collect even if the employee was negligent, grossly negligent, or asumed the risk.
When is a general partnership/joint venture formed?
A general partnership/joint venture is formed whenever two or more persons intend to carry on as co-owners a business for profit.
1. Papers need not be drawn up to form a partnership
2. Nothing need be filed with the state
3. An express agreement is not required; an agreement can be implied from conduct.
What is required for a corporation to be voluntarily dissolved?
Dissolution requires directors and shareholders approval. Dissolution can also be pursuant to a court order.
What property becomes part of the bankruptcy estate under Chapter 7 of the US Bankruptcy Code?
- The debtor’s estate (assets available to pay creditors) includes real and personal property at the time of filing.
- Estate property (e.g., interest from bonds) received within 180 days after filing of the petition for relief.
- Property the debtor receives from divorced, inheritance, or insurance within 180 days after filing of the petition.
- Leases of property may be assumed and retained by the trustee, assumed and assigned to another, or rejected by the trustee.
When a company files a petition for reorganization under Chapter 11, how is the creditor’s committee integrated?
A creditor’s committee, if appointed, will consist of unsecured creditors.
What is fiduciary duty of loyalty?
It’s when the director must act in the best interest of the corporation, rather than in their own interest or in the interest of some third party
What is fiduciary duty of care?
When making a decision for the corporation, officers and directors must act with the care an ordinarily prudent person in a like position would exercise.
