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 pressed to meet current obligations as they mature. She is in fact some $12,500 in arrears in payments to her creditors on bills submitted during the past two months. Will the fact that Cott is solvent in the balance-sheet sense result in the court’s dismissing the creditors’ petition if Cott objects to the petition? Explain.

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