In re Tarletz
United States Bankruptcy Court for the District of Colorado
27 B.R. 787 (1983)
- Written by Steven Pacht, JD
Facts
Larry Tarletz (debtor) was the president of a business that entered into a Chapter 7 liquidation proceeding. Tarletz personally guaranteed some of the corporation’s debts. The holders of the debts that Tarletz guaranteed (creditors), who did not want to wait for the end of the corporation’s liquidation and any subsequent state-court litigation to recover any deficiency from Tarletz, filed an involuntary-bankruptcy petition against Tarletz. Tarletz’s delinquent debts were small, but the future amounts due were large. Tarletz had no reasonable basis for not paying the debts. Tarletz was not liquidating his affairs or dissipating assets, but he was paying current obligations rather than past-due amounts. Tarletz moved to dismiss the petition on the ground that he was regularly paying his legitimate debts as they became due. Additionally, Tarletz indicated that if the bankruptcy petition was not dismissed, he would convert the case to a Chapter 11 reorganization case. Finally, Tarletz cited the negative effect of the bankruptcy petition on his ability to obtain credit and run his business.
Rule of Law
Issue
Holding and Reasoning (Clark, J.)
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