Discussion

Tri-State Supply purchased used equipment from various restaurants, including Coffee & Connections. Tri-State refurbishes and sells the equipment to small restaurants. In December 2015, Tri-State purchased five freezers and five ovens for $20,000. Because of the good relationship between the companies, Coffee & Connections financed the purchase for two years; however, Coffee & Connections did not obtain a perfected security interest in the equipment. In July 2016, Tri-State sold all of the equipment to another refurbishing company for $1,000 and filed bankruptcy 7 days later. Tri-State still owed approximately $16,000 to Coffee & Connections for the equipment.

Evaluate the legal and ethical issues associated with Tri-State's sale of the equipment before filing bankruptcy. What recourse does Coffee & Connections have in recovering the monies still owed on the equipment or the remaining oven?