Andrew, the shareholder-manager of a wheel manufacturing company (Wheelies Inc.), starts a new auto parts manufacturing...
Andrew, the shareholder-manager of a wheel manufacturing company (Wheelies Inc.), starts a new auto parts manufacturing company (CarBasics Inc.). He makes sure that Wheelies gets all its supplies only from CarBasics at above-market prices. Workers at CarBasics get their salaries from Wheelies. Two years later, CarBasics is a stupendous success while Wheelies has creditors knocking on its doors. Are shareholders of CarBasics liable to creditors of Wheelies?
A) Yes, they are liable because a manufacturer owning a supplier is per se illegal.
B) Yes, they are liable because looting occurred between CarBasics and Wheelies.
C) No, they are not liable because CarBasics is not a subsidiary of Wheelies.
D) No, they are not liable because CarBasics and Wheelies are separate legal entities.
Homework Answers
As per the act two corporate entitied are seperate each other.
Even though promoters are same company has seperate legal identity
Hence CarBasics not liabile to the payments of Wheelies
Hence answer D is correct
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Andrew, the shareholder-manager of a wheel manufacturing company
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