Lease Case
Essay Preview: Lease Case
Report this essay
How to handle the lease on the kitchen space, which has 18 months more to run?
How to handle the lease on the van, which has 18 months more to run?
How to handle the lease on the kitchen equipment, which as six months more to run?
What have you learned this week that would ensure that ech of the above outcomes would be a win/win situation?
There are a variety of options for distributing the remaining capital. You take the remaining capital giving the chefs nothing; you take $12,000 leaving $3,000 for the chefs; you take $10,000 and they take $5,000; you split the capital evenly; you take $5,000 and they take $10,000, you take $3,000 and they take $12,000; you leave all the remaining capital for them. You need to recoup as much as your investment possible to open an alternative venture. You recently began to look at the possibility of opening a flower shop, although you have not yet done extensive planning for it. To do so you need capital. You also do not think that the chefs deserve the capital because they caused the business to fail.
You also need to rent space for this new venture, and you were thinking that you might take over the lease on the store front space that you rented for the catering business. The only problem is the kitchen, which you really do not need and dont want to have to pay a premium price for. Your options are to promise the chefs that you will make the storefront lease payments; to have the lease amended to be in your names only (which would cost about $500); terminate the lease and pay the $1,000 penalty; have the lease amended to remove your names (same $500 cost); accept the chefs promise to pay the lease. All in all, you think it is better to leave the lease alone and just promise the chefs that you pay it rather than pay the fee for changing the names on the lease, terminating it, or paying the fee to assign it to them. You are concerned that if they took over the lease and then later could not make payments, you would still be responsible.
You could certainly use the van leased for the catering service for flower deliveries. Your options for the van are similar to those for the storefront space. You could promise the chefs that you will make the van payments, have the van lease amended to be in your names only (which would cost about $500); terminate the lease and pay the $1,000 penalty, have the lease amended to remove your names (same $500 cost); accept the chefs promise to pay the van lease. You are concerned that if the chefs took over the lease and then later could not make the payments you would be liable. Your first preference is to promise the chefs that you will make the payments. If necessary, you are willing to make the $500 payment to take their names off the lease. You have the same concern about the van lease