MGMT 108 Fall 2014 Case 2
Michael Huai 904008192, Allyson Bach 203963008, Jacquelyn Gentes 303885312, Jason Allen 804209959, Victoria Bernard 003901479
1. Bankruptcy was filed before all these transactions took place, therefore all the assets and proceeds are post petition and none of the transactions, securities made will qualify for discharge.The order at which unsecured/secured creditors collect will be unaffected by bankruptcy. a. Regional has priority over Monster with regard to Shady’s inventory of masks. According to Article 9 of the UCC, the Manufacturer, in this case Monster, has priority as long as they file before delivery and send a written notice to the prior perfected party (Regional Bank). Although Monster filed the day before delivery, they did not send a written notice to Regional Bank. Therefore, Regional Bank has priority over the masks because the security agreement Regional Bank signed with Shady covers Shady’s present inventory, proceeds, and afteracquired inventory. Monster could have prevented this by checking the UCC filings and seeing the lien Regional Bank had, thus could’ve sent them a notice before the delivery of the new item.
b. Bewitched has priority over Regional Bank because it is a “buyer in the ordinary course of business.” Bewitched is a “buyer in the ordinary course of business” because it did not buy the inventory from Shady holding PMSI as collateral. In this case, Bewitched will take the goods free from any security interest. Therefore, under Article 9 of the Uniform Commercial Code, buyers in the ordinary course of business have priority over the first party to file or to perfect (Regional Bank). 2. Yes, First Time Bank can repossess Robert’s new machinery and equipment because they have a valid security interest and are attached. Also there are no other entities competing. However, if there ...
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