Homer was the sole shareholder of two corporations, CrustyBurgers and QuickyMart. At the organizational meeting for these corporations, as sole shareholder, he appointed himself Chairman of the Board (other members of the board were Bart and Lisa) and Chief Exectutive Officer for both companies.
He initially contributed $100,000 (a sum that would be considered adequate capital at the time) into each of the corporations in exchange for all of their stock. This money was deposited into separate accounts for each corporation.
Shortly after this meeting, Homer met with Spamour Meat Company to arrange for a long-term (three year) hamburger supply contract on behalf of CrustyBurgers. Spamour was to deliver $20,000 worth of hamburger on the first of the month, and CrustyBurgers was to pay for the meat at the end of the month.
For the first year, this arrangement worked well, with Homer basically breaking even with CrustyBurgers. Meanwhile, QuickyMart was a complete success.
The next year, Homer held an annual meeting for each corporation. However, after this meeting, things started to go poorly for CrustyBurgers. Sales plummeted, and there was only $5000 in the CrustyBurger account to pay Spamour. However, Spamour was aware of Homer’s success with QuickyMart and thought he could
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