Person B has been a rancher all her life. Her ranch is valued at $ 500,000. Person B has total 8 creditors and an indebtedness of $ 70,000. Among all the creditors two of the largest creditors are person O with a debt of $ 30,000 and person S with a debt of $ 25,000. The rest of the six creditors have a claim of less than $ 5,000. The drought has ruined all crops of person B. B cannot pay off her creditors. To find: The validity of a voluntary petition of the bankruptcy of person B with a $ 500,000 ranch.

Question

John Bunker has assets of $130,000 and liabilities of $185,000 owed to nine creditors. Nonetheless, his cash flow is positive, and he is making payment on all of his obligations as they become due. I. M. Flintheart, who is owed $22,000 by Bunker, files an involuntary petition in bankruptcy under Chapter 7 against Bunker. Bunker contests the petition. What result? Explain.

Answer 1

Question

Chapter 15, Problem 2BS

(a)

Summary Introduction

Case summary: Person B has been a rancher all her life. Her ranch is valued at $500,000. Person B has total 8 creditors and an indebtedness of $70,000. Among all the creditors two of the largest creditors are person O with a debt of $30,000 and person S with a debt of $25,000. The rest of the six creditors have a claim of less than $5,000. The drought has ruined all crops of person B. B cannot pay off her creditors.

To find: The validity of a voluntary petition of the bankruptcy of person B with a $500,000 ranch.

(b)

Summary Introduction

Case summary: Person B has been a rancher all her life. Her ranch is valued at $500,000. Person B has total 8 creditors and an indebtedness of $70,000. Among all the creditors two of the largest creditors are person O with a debt of $30,000 and person S with a debt of $25,000. The rest of the six creditors have a claim of less than $5,000. The drought has ruined all crops of person B. B cannot pay off her creditors.

To find: The validity of involuntary bankruptcy petition because of the force of person O or person S.

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