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Rafael Guitar often jokes that "With my name, I was going to play the piano?" Instead, he has become a very successful flamenco guitarist based in Greenwich Village. He has a line of guitars sold by his company, Guitar's Guitars, Inc. (GGI) that he has promoted with tours and PBS appearances. The recession, however, caught GGI in the midst of a major expansion just as demand for its products plummeted; it has now filed chapter 11. Rafael is the president and the company's shareholders are various members of his extended family and close friends. All very much want for GGI to survive. Because the company has hired Manuel Hinajosa, an MBA with a good track record, to run the business side, Rafael thinks there is every chance for a recovery as the economy picks up. However, "I also have to look out for my family," which includes child support times seven children.

A much larger company based in Boston has offered to hire him to become the lead promoter of their guitars at his prior salary with a $50,000 signing bonus. (He has taken no salary from GGI during the last six months because of its difficulties. He wants a new contract with GGI that would grant him the same bonus. He thinks the board, which is made up of leading music industry figures (but only one member of his family other than himself), would be glad to approve such a contract. He is sure the creditors' committee will concur. "They know that it is my name and promotion that will produce the sales." What is your advice? 101(31)(B), 503 (c).