Horizon Cargo conducted an interisland air freight service in Hawaii. Shipley is the president and general manager of Horizon Cargo. Horizon Cargo was created in August 1977 as the operating arm of Horizon Air Services, Ltd. (Horizon Air), a bankrupt corporation which had filed for reorganization under Chapter XI of the Bankruptcy Act. Horizon Cargo was formed to carry on the business of Horizon Air pursuant to a plan to repay creditors. Airgo is a Texas freight transport company. In February 1978, Horizon Cargo and Airgo entered into a sixty-day service agreement whereby Airgo agreed to provide, operate and maintain a DC-3 cargo plane for Horizon Cargo's use in its freight operations in Hawaii. In return, Horizon Cargo was to pay Airgo for services rendered. Shipley personally guaranteed certain obligations owed by Horizon Cargo to Airgo under this contract.