Fish and Asparagus Ltd. ("FASL") is a federally incorporated business that operates a restaurant in each of Ottawa, Toronto, and Kitchener, Ontario. It also sells frozen dinners to grocery chains across Canada. The frozen dinners are produced at its facility in Burlington Ontario.

FASL had entered into an agreement of purchase and sale to sell a building it owned in Windsor Ontario, but the buyer refused to close the transaction. The buyer is very wealthy but simply decided not to close the real estate transaction. The sale price was $1.2 million, and FASL was counting on the sale proceeds to give it some cash flow and pay off its $800,000 mortgage on the property.

The restaurants have lost over $ 7 million since March 2020, but the frozen dinner line has generated a profit of $2.5 million. However, FASL owes $10 million to creditors and its only asset is the building in Windsor plus $200,000 in the bank. All its restaurants and its manufacturing facility are leased. The equipment in these restaurants in also leased from Super Duper Equipment Rentals.The production assembly equipment in Burlington is also leased from this company. FASL is up to date on all its lease payments, but cannot keep this up much longer since it only has $200,000 left.

The CEO and CFO think they can salvage the business if they close the restaurants, sell the Windsor building and focus on the frozen dinner business. The restaurants employ a total of 20 people. Management thinks 5 of those people have skills that could be transferred to the production plant in Burlington, but the rest will have to be let go. But they only have enough money to cover the negative cash flow for the next few months.There are 12 people employed in the Burlington production facility and the plan is to keep them working since the facility is profitable.

Question

1. Did the buyer who was unwilling to complete the real estate transaction breach the sale and purchase agreement? If it violates, what responsibility will the buyer bear?

2. Does FASL have to return the money owed to creditors? If it is not returned, what kind of legal responsibility will FASL bear?

3. Since all FASL equipment is leased, will other legal issues be involved?

4. What does FASL's latest lease payment mean? What responsibilities should FASL fulfill?

5. What are the risks of closing the restaurant and selling the building? What kind of legal issues are FASL likely to face?

6. Among the 20 employees employed by the restaurant, can the 5 skilled employees be exchanged at will? Does dismissing the remaining 15 employees count as unprovoked dismissals?

7. What does the emergence of negative cash flow mean?

8. Are there any other legal issues? Or hidden risk