Part 1

Boris, Basil and Beryl are shareholders in Borsht Brothers Inc. a company incorporated under the CBCA. They also sit on the three-man board of directors. The company specializes in the preparation and distribution of "borsht", a popular eastern European soup made from beets and served hot or cold. In anticipation of the very busy Easter season, the company places an order for a greater than usual quantity of Quebec grown beets with Menshy Vic Farms, its most important supplier.

Unfortunately, when the beets are delivered, Boris, the brother responsible for quality control, notices that the shipment contains more than the acceptable quantity of residual insecticide.

When Boris tells Basil, the brother in charge of purchasing, that the beets are useless, Basil desperately tries to replace them. Menshy Vic denies that the shipment is contaminated and tells Basil that it has no more beets to ship. Basil soon discovers that the stocks of other Quebec suppliers are depleted as well and is left with no choice but to order costlier beets from farmers in Florida. Given that these expensive American beets are also in short supply, the company is unable to supply two of its biggest customers, Dostoevsky's Diner and the Bolshoi Buffet, both of whom tell Beryl, the company's customer relations VP, that they will never buy anything from Borsht Brothers again.

Not surprisingly, the company loses money. According to Vissarion Belinsky, Borsht Brother Inc.'s accountant, the company has, to date, lost profits to the tune of $180,000 and stands to lose an additional $800,000 over the course of the current fiscal year.

The brothers want to know if there is anything that you, the company's lawyer, can do to recover the company's losses. They also complain to you, with justifiable bitterness, that the value of their shares in the company has hit rock bottom and wonder if there is anything that can be done for them personally.

How will you advise them?

Part 2

If only to make matters worse, two of the company's customers have failed to pay for the borscht which the company delivered to them over the past few months. One of these customers is Stan's Peoples' Take-Out Ltd., a federally incorporated company whose founder, Stan Kazak, is the sole shareholder. It has come to the attention of Boris, Basil and Beryl that Stan, who invariably stations himself at the restaurant's cash register, has been stuffing the proceeds of every fourth or fifth sale into his pocket for his personal benefit. Borscht Brothers Inc. needs every dollar that's owed to it and believes that Stan should be compelled to pay for the borscht from his own pocket. Beryl is a graduate of the John Molson School of Business and knows a thing or two about the law. It is you, however, in your capacity as the company's lawyer, who can best tell him what to do in the circumstances.

Part 3

Given the company's financial difficulties, Boris, Basil and Beryl decide that the company must evolve in order to survive. After consulting with Ruby Raskolnikov, a master chef and professor at the legendary Culinary Institute of Vladivostok, the brothers decide that in addition to its famous borscht, the company will produce a Chinese dish with a Russian twist. The new product, the "Egg Rolski" is a disaster and the borscht enthusiasts who consumed the company's original product are disillusioned and feel betrayed. One of the company's creditors petitions it into bankruptcy and the trustee in charge of the bankruptcy promptly sues Boris, Basil and Beryl personally for the losses suffered by the company's creditors. In light of the pertinent statutory provisions and case law, what are the trustee's chances of success?