When I was self-studying the bankruptcy code in preparation for the bar exam, I came across an old Tennessee bankruptcy case in which a pet store that earned almost $150,000 per year with only $85,000 in debt against the building and inventory went bankrupt within the third year of two brothers taking over the business after the death of their father.
In the court filings, one of the brothers claimed that the other one (who managed the day-to-day operations of the store) was responsible for the bankruptcy due to mismanagement. Specifically, he alleged that his brother alienated customers by abandoning the store’s policy of giving new fish to customers who bought some that died shortly after the purchase.
The old policy was highly informal—if you bought some fish and they died, you’d get new ones. The new policy required that you bring in the dead fish, a water sample, and … Read the rest of this article!