May 09, 2006
Big Love Must Be Written by a Corporate Law Professor
Posted by Christine Hurt

Last night I took a break from grading to watch Sunday night's episode of Big Love.  Ann Althouse is losing interest because the show focuses on financial problems.  Exactly!  You could teach a whole semester on the financial transactions on the show.  For example:

1.  What kind of interest does Roman have in the HomePlus stores?  Last episode, we got the impression that Roman had made a loan to Bill, but in return he gets "15 percent of the (revenues?  profits?) store."  So, is he a creditor?  Is he a partner?  We don't get to see the documents, but how is it worded?  Does the 15 percent cover new stores?  Bill sort of admitted last week that it probably did.  The have now settled, but we know that Bill will never be "free" as long as Roman can expose his illegal marriages.

2.  Should Bill engage in his sale-leaseback plan?  This week, Bill made plans to sell the two stores to "the bank" for $5 million and lease them.  This gives Bill instant cash to sink into the third store, but he loses his equity and will have a drain on revenues.  Good idea?  Bad idea?  How does it affect the balance sheet?

3.  How much does reputational capital and branding matter?  The success of HomePlus seems to hinge on Bill's reputational capital.  If he is exposed, his stores will suffer.  His marketing expert wants him to play up reputational capital and brand HomeStore as the LDS family values store, with commercials that have subtle and not-so subtle visual clues as to the (presumed) religion of the owners, employees and customers of HomePlus.  This branding will give HomePlus the edge in Salt Lake City over Wal-Mart, Home Depot and Lowe's.

4.  Is Bill obligated to repay Nicki's debt?  Nicki has $58,000 in credit card debt.  The cards are in her name only and Bill did not know about them.  Nicki and Bill are not legally married.  Does she have any claim against him for contribution to her debts?  Would a creditor?  I would say no to creditors, but I don't know if she has any rights against him for support.  Why doesn't Bill just let Nicki declare bankruptcy?  She owns nothing -- not her house or her car.  Bill says he will repay her credit cards because "it's the honorable thing to do."  Nicki is like an off-balance sheet, non-recourse special purpose vehicle -- I say let her declare bankruptcy.

My biggest question has nothing to do with corporate or commercial law, though.  How do these people have health insurance?  The two non-legal wives have had four babies.  Do they just pay cash?  Do the babies have social security cards?  Who is the father on their birth certificates?  In some ways, the show is like Third Rock from the Son or My Favorite Martian -- put someone who doesn't fit into our social norms and legal system into day-to-day life and see how long you can hide them in the attic.

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