Carol Cott, doing business as Carol Cott Fashions, is worried about an involuntary bankruptcy proceeding being filed by her creditors Her net worth, using a balance sheet approach, is $8,000 ($108,000 in assets minus $100,000 in liabilities) However, her cash flow is negative, and she has been hard...

Grounds for relief for involuntary case No In an in ...

Carol Cott, doing business as Carol Cott Fashions, is worried about an involuntary bankruptcy proceeding being filed

Question:

Carol Cott, doing business as Carol Cott Fashions, is worried about an involuntary bankruptcy proceeding being filed by her creditors. Her net worth, using a approach, is $8,000 ($108,000 in assets minus $100,000 in liabilities). However, her cash flow is negative, and she has been hard pressed to meet current obligations as they mature. She is in fact some $17,000 in arrears in payments to her creditors on bills submitted during the past two months. Will the fact that Cott is solvent in the sense result in the court's dismissing the creditors' petition if Cott objects to the petition? Explain. [Forever Green Athletic Fields, Inc. v. Dawson, 514 B.R. 768 (E.D. Pa.)]
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...