6. Euro Cycles LP is the name of a business in Nova Scotia. It was formed by four friends who loved bicycles and recently graduated from university. Those four friends were the general partners and their eight parents were named as limited partners in the registration document that was registered with the NS Joint Stock Company.

The eight parents invested $100,000 in the business. Euro Cycles LP borrowed an additional $50,000 from a bank. Inventory was purchased and a building was leased.

Business got off to a slow start and Euro Cycles LP missed its monthly interest payments on its bank loan on three occasions. The bank decided to cancel the loan and demanded it be paid in full. However the business has no cash but many bicycles.

Who will have to pay the $50,000 bank loan? Why?

7. Five friends incorporated a company called Halifax Housing Ltd and rented a building from Property Owners Cooperative. Halifax Housing Ltd planned to rent rooms in the building to tenants.

Each of the five friends paid $1,000 for one common share which provided Halifax Housing Ltd with its initial start-up funding.

Unfortunately, the company could not find enough tenants and was unable to pay the monthly rent in full. At the end of one year the rent owing amounted to $20,000.

Property Owners Co-op was confident that each of the five shareholders of Halifax Housing Ltd will have to pay $4,000 toward the outstanding debt because contemporary business ethics stresses values such as respect, honesty, fairness, and openness. Is Property Owners Co-op correct? Why?/Why not?