Question
Fram, Inc. was the sole source of Framistans, an essential component of Fisker, Inc.s unique electric cars. Under their contract, Fram agreed to supply 5,000
Fram, Inc. was the sole source of Framistans, an essential component of Fisker, Inc.s unique electric cars. Under their contract, Fram agreed to supply 5,000 Framistans per month for $100,000, and Fisker agreed to pay 30 days after receipt. All went well until Fisker, which was undercapitalized, had no cash to make a payment. The companies agreed that Fram would continue to supply Framistans on a cashwith-order basis, at a price of $120,000 per 5,000 units the $20,000 premium to be applied against the delinquent balance. The arrangement worked for three months. Then, Fisker filed voluntarily for Chapter 11 bankruptcy protection and began to construct a reorganization plan. Will the creditors support and should the court allow the company to continue buying and paying for Framistans? What about the premium?
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