apter 16, Problem TOP Show all steps Chapter 15. Chapter 15.C2 Y Problem Chapter

Question

apter 16, Problem TOP Show all steps Chapter 15. Chapter 15.C2 Y Problem Chapter 15 C3 v Chapter 15 c4 v Gailey, Inc., incorporated in 1980, removed asbestos a mechanical insulation on contract jobs that required union labor. Richard Gailey had been the president, controlling shareholder, and Chapter 15.c5 v director of Gailey, Inc., from its inception. Chapter 16 v Universal Labs, Inc., was incorporated by Mr Gailey in March 1984 to analyze asbestos samples Chapter 16 C1 v and air samples and to perform general laboratory work. Mr. Gailey was the sole shareholder of Universal Labs. Chapter 16,C2 As president and director of Gailey, Inc., Mr. Gailey directed Gailey to pay certain debts of Chapter 16 ca v Universal Labs. Subsequent to that, Gailey, Inc., provided $14,500 to Universal Labs to pay for the latter's start-up expenses and costs, Chapter 16.04 Gailey, Inc., filed a voluntary petition pursuant to Chapter 11 of the Bankruptcy Code on January Chapter 17 v 28, 1985 chapter 17 c1 v The case was converted to a Chapter 7 proceeding on September 30, 1985. The trustee in bankruptcy filed suit alleging that Mr. Gailey usurped a corporate business Chapter 17 C2 Y opportunity belonging to Gailey, Inc., when he incorporated Universal Labs. Is the trustee Chapter 17 C3 v correct? n re Gailey, Inc., 119 B.R. 504 (Bankr. WD. Pa, 1990) Chapter 17 C4 Chapter 17 C5 M Step-by-step solution Chapter 17 C6 Chapter 18 a

Explanation / Answer

As per the business policy and accounting concepts, The Gailley inc and Universal Labs are separate entities. The director Bailey should not transfer the funds of Bailey Incorpation to Univerasl studios, where he is having financial interest. Fincial failure happened to Bailey Inc is due to the mismangement of the trustee. What the trustee had done is absolutely wrong.

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