Gena owns Gena’s Gourmet Pasta. She sold her pasta only in New Jersey. It was a success and the company expanded throughout the Northeast. During expansion Gena borrowed $350,000 from First Fidelity Bank. Because Gena was a new company, First Fidelity required that a third party also guarantee the loan. Gena’s friend, Marvin, guaranteed her loan.
Everything looked good at Gena’s Gourmet Pasta until Larry’s Linguine opened. Larry was a hard competitor and soon Gena was losing business. The sales reduction meant Gena had a hard time making her payments to First Fidelity. After six months, Gena defaulted on her loan. Unable to meet her bills, Gena called it quits in September 2008 failing to make additional payments to First Fidelity.
a) Fully discuss First Fidelity’s options for collecting the debt.
b) Gena is considering filing for bankruptcy. Discuss her options.
c) How would you advise Marvin?