Amanda decides to incorporate her business of homemade organic soaps and body lotions. She causes the corporation

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Amanda decides to incorporate her business of homemade organic soaps and body lotions. She causes the corporation to borrow $2500 in 2014 from a bank, and her good friend Sharon agrees to lend the corporation a further $5000 in 2015 in exchange for a promise to be paid back with interest. On top of this, she approaches her uncle to personally lend her $500 for the business. In 2015, the corporation makes an assignment in bankruptcy without paying back any of its debts. What will the creditors be entitled to if there are no other creditors and the corporation’s total assets are $5000? How would the answer be different if the bank had a security interest in all of the corporation’s assets?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Managing the Law The Legal Aspects of Doing Business

ISBN: 978-0132164429

4th edition

Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer

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