Gena owns Gena’s Gourmet Pasta. She sold her pasta only in New Jersey. It was a

Question

Gena owns Gena’s Gourmet Pasta. She sold her pasta only in New Jersey. It was a success and the company expanded throughout the Northeast. During expansion Gena borrowed $350,000 from First Fidelity Bank. Because Gena was a new company, First Fidelity required that a third party also guarantee the loan. Gena’s friend, Marvin, guaranteed her loan. Everything looked good at Gena’s Gourmet Pasta until Larry’s Linguine opened. Larry was a hard competitor and soon Gena was losing business. The sales reduction meant Gena had a hard time making her payments to First Fidelity. After six months, Gena defaulted on her loan. Unable to meet her bills, Gena called it quits in September 2008 failing to make additional payments to First Fidelity. a.) Fully discuss First Fidelity’s options for collecting the debt. b.) Gena is considering filing for bankruptcy. Discuss her options. c.) How would you advise Marvin?

Explanation / Answer

First Fidelity can started collecting the debt from the guarantee Marvin if Gena failed to fulfil it .The first first fidilety has every legal rights to do so based on Marvin's capability bto repay the debt they can go ahead with it.

Gena can file bankruptcy if he is in a situation like can't do anything with the business and no other way to lead her lfe and bankruptcy can used as an option so that the lendors can collect the debt by selling all the business assets.

Marvin is in a perplex situation. One advise is to discuss with Gena and made possible or alernate arrangements which h includes filing bankruptcy so that the bank can take hold of the business assets and it can be adjusted to the part of debt.

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