1. Identify the probable category of each creditor. What are the rights of each creditor in the event that YEC defaults on its obligation to that particular creditor?

2. If Moss and Whippany believe the financial crisis is temporary, what are their best nonstatutory options to continue the business if it becomes insolvent? What statutory option(s) do they have?

3. If Moss and Whippany do not believe the financial crisis is recoverable, what nonstatutory and statutory options does YEC have? What are the advantages and drawbacks of each option? If the building lease were not personally guaranteed by Moss and Whip-pany, how would this fact change your analysis?

4. Which creditors are bound by the provisions of UCC Article 9?

5. Does the fact that YEC has 20 employees add any ethical obligations that should be considered in Moss and Whippany’s decision making concerning the future of the company?

6. Suppose that the landlord begins to start eviction proceedings due to YEC’s payment default. How could YEC stop the eviction?

7. If YEC files for Chapter 7, what debts are potentially dischargeable? Assuming any assets are left, in what order would the creditors be paid?

Yankee Export Company (YEC) is a purveyor of U.S. products for several European food market chains. YEC’s annual revenue is approximately $10 million, and the company employs approximately 20 people, including YEC’s only shareholders, directors, and officers: Moss and Whippany. Moss is the day-to-day manager of the venture, while Whippany is mostly an investor with no management duties other than giving consul-tation on business matters when asked by Moss. For several years, the venture was profitable, but due to a rapid increase in the value of the U.S. dollar against European currencies, YEC began to have cash flow problems. Its products were becoming more expensive for its European customers, and orders slowly dropped over a period of a year. When it appeared that YEC would be unable to generate enough cash to cover monthly expenses, Moss called for a meeting with Whippany and with YEC’s accountants. The parties agreed that the rise of the dollar had a negative impact on all U.S. exports and that YEC was at the beginning of a financial challenge. The company’s assets were approximately $200,000. The current major debts are set out in the YEC Creditor Table below.