Business Bankruptcy: Pros and Cons Essay (Critical Writing)

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Bankruptcy

According to Martin and Tama (2008, p. 119), one of the reasons why an individual files for bankruptcy is to enable him or her be discharged from the debts accumulated. Upon being granted a discharge for bankruptcy, the creditors are restricted by law to collect the discharged debts. In my personal opinion, bankruptcy should not be made difficult. This is due to the fact that there are economic benefits which the society accrues as a result of an individual overspending. For example, upon overspending using a credit card, the amount of money spent is injected into the economy.

Upon receiving a discharge, there is a high probability of the same individual receiving a loan from a different credit card company. This means that consumption within the society is stimulates. According to Martin and Tama (2008, p. 119), increasing the rate of consumption within a country can contribute to a high rate of economic growth.

Title VII violation

Title VII is a United States Civil Rights Act which prohibits any form of discrimination against various parties who including employees, union members and job applicants. The various forms of discrimination which the Act prohibits include discrimination based on nationality, gender, color, religious beliefs, race and stage of employment (Miller, Cross & Jentz 509). Title VII Act is applicable in the following context;

  1. Employers whose human resource base is 15 or more employees.
  2. Employment agencies
  3. Federal government employment
  4. Labor unions which have hiring halls
  5. Labor unions with 15 or more members

However, firms with less than 15 employees are not shielded from the Act. For example, in first case, Tennington Incorporation hires white males. As a result, the firm discriminates job applicants based on color and gender. In the second case, Novo Film Incorporation only hires African-Americans from South California thus discriminating applicants based on race and nationality. The employment policies of the two firms are illegal can they can be sued under Title VII.

Sexual harassment

Title VII protects employees against any form of sexual harassment. In the case of Crawford, the form of sexual harassment evident is quid pro quo harassment. This entails form of harassment whereby sexual favors are demanded (Miller, Cross & Jentz 515). This is evidenced by the ‘inappropriate’ behavior of Metro’s employees’ relations director. Upon aiding in the investigation into the issue, Crawford is fired by the firm after being accused that she participated in embezzlement. In addition, employment of the other two employees is also terminated. In this case, Crawford’s situation qualifies for retaliation under Title VII.

Section 704(a) of Title VII Act forbids retaliation by an employment agency or an employer against an employee on the basis that he or she opposed a practice in the organization which is illegal according to Title VII Act. In addition, Title VII also prohibits retaliation if an employee has assisted in the conduction of investigations (Cihon, Ottavio & Castagnera 134).

Form of business organization

There are various forms of business organization that an organization can adopt ( Saha 37). The main common forms include partnership, limited partnership, sole proprietorship and corporations. In a partnership venture, the enterprise is owned by 2 or more individuals who contribute capital to establish the business. However, they have the responsibility to pay the debts incurred by the firm in the process of its operation.

In the first situation of Georgios’ Fashions, all the owners are sued personally for the firm’s default to pay Dee Creations for the supplies. According to Saha (42), partnership ventures are established under a fiduciary relationship between the parties. In addition, it doe not operate as a separate legal entity. As a result, the partners are a joint and unlimited liability with regard to the losses the firm incurs. This means that Georgio’s Fashions is a partnership business.

In the second situation, Georgios’ Fashions raises $ 200, 000 by selling its shares on the stock exchange market. According to Saha (46), private and public limited companies can source financial capital by selling their shares in the stock market. Individual or firms who purchase the shares become part owners of the firm. In this situation, Georgio’s Fashions operates as a corporation.

In the fourth the firm is owned by 3 people of which 2 of them do not have authority to participate in management. In this situation, the firm operates as a limited partnership. According to Miller and Jentz (539), partners in a limited liability partnership enjoy this advantage only if they do not participate in the management of the firm.

In the third situation, Georgio’s Fashions pays taxes on its net profit and receives a tax return from the IRS. In this case, the firm is operating as a C corporation. C corporations are pay taxes separately from the shareholders. In addition; they are required to pay a certain percent of their net income as tax (Fishman 13).

Choice of Business form

When deciding on the business structure to adopt, Jorge, Marta and Jocelyn should consider a number of factors. Some of these factors include the expenses, legal liability, taxation implications, individual needs and flexibility. According to Brent (497), every business has its tax liabilities. In a sole proprietorship, the tax liability is accumulated to the entrepreneur’s income tax which means that the firm does not pay taxes. On the other hand, corporations are taxed as an entity and also the owners are taxed. With regard to liability, some business structures such as corporations protect the owners from liabilities incurred by the firm. However, sole proprietorships and partnerships expose the owners to liabilities arising from the firm’s operations.

The three parties should also consider the expenditure incurred in setting up the establishment. Some business structures such as corporations are relatively expensive to establish while others such as partnerships and sole proprietorships are relatively easy to establish. This is due to the fact that there are minimal procedures involved. Consideration of individual needs with regard to ownership of the business is also important. In this case, these parties are willing to own the firm jointly by forming a partnership because they possess different business resources. In selecting the business structure, it is vital for Jorge, Marta and Jocelyn to adopt a flexible form. Flexibility will affect the effectiveness with which the firm grows.

Ethics

Chief executive officers act as agents of the shareholders. As a result, they are required to ensure that the firm’s operations are contributing towards maximization of the shareholders’ wealth. Additionally, it is their role to monitor the operations of the firm to determine whether the firm is operating profitably. One of the ways through which this can be achieved is by monitoring the firm’s books of account.

In this case, Ruether has a legal right to access NOP’s books of account. As a member of the firm’s management team, Ruether has a legal right to access the books to monitor the firms’ operations. This way, it will be possible for him to enhance ethical operation of the organization. JES denial of Ruethers access to the company’s books was unethical since it limited Ruethers role in maintaining a good agency relationship.

JES effort to gain control of the firm illustrates a manager who is directed by personal interests. In addition, his decision to dismiss Ruether was motivated by personal conflicts between the two. Conflicts within the organization have the effect of hindering a firm from attaining its goals.

Duties of a Bailee

According to Adamson (305), a bailee is under an obligation to take care of the bailed goods. This means that the bailee is liable for any loss which occurs when he or she is in possession of the bailed property. For example, the bailee is personally liable for losses which occur as a result of negligence. In the first case, Ricardo left Steve’s lawn mower under no ones care to prepare the back yard. Upon returning, he discovered that the lawn mower was stolen. In the 2nd case, Maureen does not exercise standard care by leaving her garage open which led to Alicia’s speedboat being stolen. In the two cases, the bailees (Maureen and Ricardo) breached their duty. This is due to the fact that they acted with negligence and did not exercise standard care (Hussain 285).

Insurance Contract

In the case of re Katrina Canal Breaches Litigation, the courts decision was based on the interpretation of the contract terms. According to Casenote Legal Briefs (159), words in insurance policies or contracts should be accorded their prevailing meaning to avoid absurd results. A concrete definition of the terms of contract ensures that ambiguity is eliminated.

In this case, Unitrin Preferred Insurance Company which covered Richard Vanderbrook’s home, the policy did not define the term flood despite excluding it from the insurance contract. As a result, ambiguity existed in the contract. In such as case, a comprehensive definition of the contract terms and how they fit into the context of the insurance policy was necessary. Failure to define the words may result into the ruling being made in favor of the plaintiff.

However, the case could also be ruled in the defendant’s favor. For instance, in this case, failure to define the term ‘flood’ does not make it ambiguous. This is due to the fact that the term would be given meaning according to the definitions by treatises, dictionaries and jurisprudence. Despite the fact that these sources may give different meaning to the word, the term does not become ambiguous. However, the contract expressly excluded some of the risks by defining the risk (Casenote Legal Briefs 159).

Works Cited

Adamson, John. Law for business and personal use. Mason, OH: South-Western Cengage Learning, 2008. Print.

Casenote Legal Briefs. Contracts murphy Speidel and ayres. New York: Aspen Law and Business, 2008. Print.

Ciho, Patrick and Castagnera, James. Employment and labor law. Mason, OH: South-Western Cengage Learning, 2011. Print.

Brent, Nancy. Nurses and the law: a guide to principles and applications. Philadelphia: WB Saunders, 2011. Print.

Fishman, Stephen. Home business tax deductions: keep what you earn. Berkeley: Nolo, 2011. Print.

Hussain, Ashiq. A textbook of business finance. Nairobi: Heinemann, 1989. Print.

Martin, Nathalie and Tama, Ocean. Inside bankruptcy law: what matters and why. New York: Aspen Publishers, 2008. Print.

Miller, Roger, Cross, Frank and Jentz, Gaylord. Essentials of the legal environment. Mason, OH: South-Western Cengage Learning, 2011. Print.

Saha, Tapash. Business organisation and management. New Delhi: Tata McGraw-Hill Education, 2009. Print.

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IvyPanda. (2022, March 26). Business Bankruptcy: Pros and Cons. https://ivypanda.com/essays/business-bankruptcy-pros-and-cons/

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