Scenario: Jeb and Josh are lifelong friends. Jeb is a wealthy wind-power tycoon,

Question

Scenario:

Jeb and Josh are lifelong friends. Jeb is a wealthy wind-power tycoon, and Josh is an active outdoor enthusiast. They have decided to open a sporting goods store, Arcadia Sports, using Jeb’s considerable financial resources and Josh’s extensive knowledge of all things outdoors. In addition to selling sporting goods, the store will provide whitewater rafting, rock-climbing, and camping excursions. Jeb will not participate in the day-to-day operations of the store or in the excursions. Both Jeb and Josh have agreed to split the profits down the middle. On the first whitewater rafting excursion, a customer named Jane falls off the raft and suffers a severe concussion and permanent damage to her spine. Meanwhile, Jeb’s wind farms are shut down by government regulators, and he goes bankrupt, leaving extensive personal creditors looking to collect.

A. Recommend a specific business entity for Arcadia Sports and include your reasoning.

B. Based on the characteristics of each type of business entity, determine the type under which Jeb and Josh would be personally liable to Jane for damages.

C. Based on each type of business entity, analyze the ability of Jeb’s personal creditors to seize the assets and/or profits of Arcadia Sports.

Explanation / Answer

Recommend a specific business entity for Arcadia Sports and include your reasoning.?

A controlled obligation partnership would be a perfect reference for Jeb, Josh, and Arcadia Sports. Jeb serves as the companion who donates the most financial resources and since he already has a profitable wind power business he will not be involved in the day to day operations. Josh, on the other hand, serves as the subject matter expert on all things outdoors and sporting goods and he will operate the business. In this case, the liability protection is a good selling point and in this type of partnership, structure protects individual partners from own liability for careless acts of other partners or employees not under their direct control. Another great aspect of an LLP is that individual partners are not responsible for company responsibilities.

Based on the characteristics of each type of business entity, determine the type under which Jeb and Josh would be personally liable to Jane for damage

Based on the characteristics of each type of business entity, Jeb and Josh would be personally liable to Jane for damages under a partnership. Beneath a conglomerate, both partners are individually accountable for all losses incorporating the losses of their partner so in this case once the prey recovers enough to sue Jeb and Josh will both bear the brunt of the damages.

Based on each type of business entity, analyze the ability of Jeb’s personal creditors to seize the assets and/or profits of Arcadia Sports.

As based on my research, the only business entity that would allow Jeb’s personal creditors to seize the assets/profits of Arcadia Sports would be a general partnership. In this business entity, Jeb’s creditors can obtain the recovery against both Jeb and Josh as each partner is personally liable for each partner’s debts.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.