Reference no: EM134137

Question :

The employees of the Lending Store, Inc. did connect the union. The corporation was profitable for several years. Thus, the Phoenix economy currently took a severe downturn and business has slowed significantly. Also, a serious incident has happened with one of their management employees, John Jones. While driving a company car with the Lending Store, Inc. logo printed on the side of the vehicle, this employee was involved in an auto accident. The driver of the other vehicle was critically injured. The employee admits he deliberately hit the other car when this driver shouted negative comments to him about the Lending Store actually after seeing the company's name on the vehicle. The employee also admits he had been drinking alcoholic beverages through his lunch hour in violation of company policy. He was on his way home when the accident happen. The driver of the other vehicle files a lawsuit demanding repayment for medical bills and One Million Dollars in "other" damages. He names both John Jones and the corporation as co-defendants. The company does not have sufficient insurance coverage to pay for the damages claimed. In addition to this bad news, the poor economy has caused a major decline in business. Now the corporation is losing money each month and has almost no cash on hand. The corporation is unable to pay this accident claim, the monthly rent for office space or its employees' wages. Due to the employees have not been paid for over a month, the employee's union has threatened a strike. Baker and Albert have not taken their salary for the past six months in order to assist the company financially. They are both very concerned that the company can't be able to continue in business provided these recent and important financial setbacks.

1. Describe the theory of law that would allow the third party injured in the auto accident to build a claim against the Lending Store, Inc. for damages. Include in your clarification the applicability of this general theory of law to the facts of this particular case.

2. Describe the defenses the company could maybe assert against this third party's lawsuit. Include in your explanation the applicability of these legal defenses to the facts of this particular case.

3. What decision do you suppose the court would most likely come to with regard to the claims for damages made by the injured driver against (a) the employee and (b) the company? Describe the legal rationale for each decision.

4. Since Baker and Albert have not been paid for six months, they have serious financial problems of their own. They are considering filing personal bankruptcy. Describe the process they would go through and the impact on their finances if they were to file a Chapter bankruptcy.

5. Baker and Albert believe they will revive the company into a profitable enterprise again if they have some immediate financial relief. Describe how a Chapter bankruptcy filing by the company could be relevant in this situation. Include in your clarification the likely outcome for the Lending Store, Inc. if it would successfully complete this kind of bankruptcy process.