Please read the case below and answer in the following format: 1) Relevant Law 2

Question

Please read the case below and answer in the following format: 1) Relevant Law 2) Conclusion - the outcome, and why. The book for this course is Business Law with UCC application - 14th edition The case is the following one:

Facts: U.S Truck Company, Inc., filed for a reorganization under chapter 11 of the Bankruptcy code. When the organization plan was presented for confirmation, one creditor objected to the plan. The creditor argued that the debtor was facing a possible strike and a new labor contract, both which could place an additional strain on the debtor’s finances. These potential labor problems, the creditor concluded, made the plan unfeasible. U.S. Truck admitted that the labor problem existed but noted that the company had recently rebounded from its financial problems to become very successful. Moreover, the labor union had just ratified two previous labor contacts by a 95 percent majority vote. U.S Truck concluded that these factors made the plan workable, which was enough under the code, because the code did not require a guarantee of success.

Issues: Was the conclusion correct?

Laws:

Conclusions:

Explanation / Answer

Issue: Was the conclusion correct?

Law: Chapter 11 Bankruptcy Law

Conclusion: The current condition of the company is not so sound that it can file for reorganization under Chapter 11. As per Chapter 11, the company filing reorganization needs to present the reorganization plan to the court. If the court finds the plan feasible, it is accepted and implemented. The plan must be designed with the prime objective of satisfying the interests of creditors. In this case, the company was facing the probability of a strike and a new labor contract. This would not have been a feasible time for the debtor to bounce back, hence the reorganization plea needs to get rejected.

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