Running Head: MEMO aa aa aa aa aa aa aa aa aa aa aa aa aa aa a aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
aa aa aa aa aa aa aa aa aa aa aa a aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 1
5-1 Final Project Milestone Two
BUS 307
SNHU
MEMO aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 2
Subject – Probable legal issues relating to Miracle Cough Syrup
I am sincerely sorry to hear all the issues that you have encountered during the past
few months relating to the Miracle Cough Syrup business. I will use my knowledge and
skills to help you arrive at the most suitable solutions to address your concerns. I have
incorporated a broad range of details in the memo relating to legal defenses, civil claims,
implications of bankruptcy on business assets and assets of individual family members and
intellectual property rights.
Legal Defenses
While performing the commercial loan accounting review process, it was determined
that Jane, Sam’s wife, had been siphoning off a large sum of corporate money and
manipulating the books of accounts so that her actions would not be revealed. She had also
forged your signatures a number of times while giving checks to Don, a local loan shark, so
that she could clear her gambling debts. According to the general rule, when an
unauthorized individual does a signature on a negotiable instrument, the legitimate party will
not be held liable or accountable. So, in the specific scenario, Jane would be personally held
liable for her actions relating to forging the signature unless you make the decision to ratify
the signature and become liable for the specific transactions.
The Universal Commercial Code (UCC) is responsible for governing the
determination of liabilities pertaining to customers and banks for the losses that have been
incurred as a result of fraudulent transactions. Generally, UCC places the loss on the party
that it deems ideal so that the situation can be avoided, so it is typically a business entity
(Uniform commercial code. Uniform Law Commission, 2021). However, in the situation, the
MEMO aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
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check has not been authorized by the business, and so it cannot be charged to the corporate
account. Additionally, UCC also has the ‘Read your statement’ provision, which enables
account holders to review their regular account statements to identify unauthorized charges.
In case an account holder fails to identify any fraudulent transactions within 30 days of the
statement mail date, he may be liable for the unauthorized checks. You must note that you
have limited rights to recover the funds, and you must identify and report the unauthorized
signature by Jane to the bank within one year. There is a chance that your business will be
held liable for the transactions and not Jane. The bank can determine whether the business
must incur the losses for the fraudulent transactions, and it could force Miracle Cough Syrup
to accept the financial liability. The signature by Jane must be compared with your actual
signatures so that differences can be identified and Jane can be held accountable for her
actions.
Legal Defenses in relation to the church
It has been ascertained that Jane had converted a check into equivalent cash and
slipped it into the collection box at a church so that she could feel less guilty about her
actions. Regarding this matter, the same legal defense can be applied, and the onus of the
actions can fall on Jane. Even though the act of giving money to the church can be
considered to be a good action but the money that she was using did not belong to her. On
the contrary, it was the money of the Miracle Cough Syrup business that she had acquired
due to forgery of signatures. The handwriting comparison can also be done in the context of
the church to ensure that the financial obligation can be successfully transferred to Jane and
not the syrup business. aa
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aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 4
Civil Claims
In the specific situation, you have the option to bring civil charges against Jane so
that it would be possible to recoup the costs relating to the fraudulent checks. You must
prove that there were no red flags, that the business entity exercised ordinary care, and it
had no role to lay in the entire forgery episode. By proving integrity on the part of the
business, it is possible to make sure that the liability successfully falls on Jane, who was
actually responsible for the fraudulent activities. Thus, you have the option to use civil
charges to ensure that Jane will be subjected to punishment and prosecutions for the
fraudulent actions that she has committed while acting as the bookkeeper of the Miracle
Cough Syrup business. It can help the business to get reimbursement for the fraudulent
checks that have been drawn in its names.
Available forms of bankruptcy
Different forms of bankruptcy can be applied to a business in such a situation,
depending on the specific type of business. The diverse forms of bankruptcy are different for
sole proprietorships, partnerships and corporations. Since Miracle Cough Syrup is a Limited
Liability Corporation (LLC), the ideal form of bankruptcy will belong to the corporation
category. The two main forms of bankruptcy that can be considered by the LLC business
include Chapter 7 (liquidation) and Chapter 11 (reorganization). Chapter 7 will lead to
liquidation, and the business will cease to exist and carry out the usual business transactions.
On the other hand, Chapter 11 can lead to restructuring. Chapter 7 option can be chosen
when a business is not worth saving, whereas Chapter 11 can be adopted if a business has
the potential to survive, sustain and effectively carry out the business operations. I believe
MEMO aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 5
that Miracle Cough Syrup has the potential to recover since it has been performing
exceptionally well in the market setting, and the customers have responded positively to the
offerings of the business. Thus, the business reorganization (Chapter 11) bankruptcy is ideal
for the scenario since it would enable the business to carry on with its operational activities.
This form of bankruptcy will aid in the continuation of the Miracle Cough Syrup business in
spite of facing legal complexities. aa aa aa
Implications of bankruptcy on the business assets
When a case is filed under the business reorganization bankruptcy category (Chapter
11) of the United States Bankruptcy Code, the owners (or debtors) will have to be the
trustees of the company. So, this bankruptcy option will make sure that you still have
possession of the business assets and you have the duties as well as the power of the trustee.
You can operate the business even in such a difficult situation, and if the court gives the
necessary approval, you can borrow new money to carry on with the business operations of
Miracle Cough Syrup (Chapter 11 - Bankruptcy Basics. United States Courts, 2021). By
filing Chapter 11 bankruptcy, you would act as the ‘debtor in possession,’ and hence you
can have access to business assets even when the reorganization is taking place. By choosing
the bankruptcy option, you will be able to pay the creditors a section of debt that is owed to
them over a period of time. The business assets may serve as security that would help to
pay off the debt of the business. One of the main advantages of the business reorganization
bankruptcy is that your personal assets would not be at risk.
Implications of bankruptcy on the assets of individual family members
MEMO aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa
aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 6
The selection of the business reorganization bankruptcy can give rise to implications
relating to the assets that are owned by the individual family members of the household.
While the assets of the business would be used as security, the assets of the individual
family members would be free from any kind of risk. Thus, even if the reorganization
bankruptcy may lead to the forfeiture of certain business assets, the family assets cannot be
used to meet the liability and financial obligations of the Miracle Cough Syrup business.
Legal Resources for the infringement of intellectual property rights by Bob
Bob has reverse engineered the recipe of the Miracle Cough Syrup and posted it
online since Sam was not willing to enter into an exclusive distribution deal. In the specific
situation, you have the option to take relevant legal recourse since Fred’s Miracle Cough
Syrup had been patented. As you have already been issued a patent for your syrup, you have
the option to file a case against Bob relating to patent infringement. You are in a position to
take legal action against him based on your intellectual property rights relating to your
cough syrup. Since Bob has been involved in using, selling or manufacturing the cough
syrup without your necessary permission and approval, you are protected by common law.
After the filing of an infringement suit for the unauthorized use of the syrup recipe by Bob,
you may have to prove that he unlawfully got hold of the recipe, which acts as your trade
secret. I believe you have a good chance of recovering damages and losses because of the
vengeful actions of Bob.
References
Chapter 11 - Bankruptcy Basics. United States Courts. (2021). Retrieved April 1, 2022,
from https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-
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aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa aa 7
bankruptcy-
basics#:~:text=A%20case%20filed%20under%20chapter,court%20approval%2C%20borro
w%20new%20money.
Uniform commercial code. Uniform Law Commission. (2021). Retrieved April 1, 2022, from
https://www.uniformlaws.org/acts/ucc
