Answer to Question #108290 in Law for Abhishek

Question

Rohan, runs a grocery shop. A long term customer Madhav, places an order of 200 kg almonds to be
delivered for distribution amongst his employees. Rohan packs the entire quantity in 500 gm packs and
delivers at Madhav’s factory. Madhav promises to pay the money two days later. When the time comes
to pay, Madhav claims he is insolvent. Judge the case.

Answer 1

Madhav has incurred a cash flow insolvency where he is unable to pay Rohan for the value of goods he ordered. Under 28 U.S. Code § 3302. Insolvency Madhav may file for bankruptcy to reshape the relationship between him and his supplier (Rohan). However, the court has to first determine whether Madhav intentionally drove his company to bankruptcy.