Question 26

Goodluck Inc. is insolvent. Its liabilities exceed its assets by $15 million. Mohammed, its president, and other close family members own Goodluck. Mohammed, whose assets are estimated at less $2 million, guaranteed the corporation's loans. A consortium of banks is the principal creditor of Goodluck, having lent it $9 million, the bulk of which is unsecured. The banks have decided to seek reorganization of Goodluck, and Mohammed has agreed to cooperate. Regarding the proposed reorganization:

Mohammed's cooperation is necessary for signing the petition for a reorganization.

If a petition for bankruptcy is filed against Goodluck, Mohammed also will have personal bankruptcy status resolved and relief granted.

Only a duly constituted creditors creditors' committee may file a plan of reorganization of Goodluck.

Goodluck will remain in possession of its assets unless a request is made to the court to appoint a trustee.