International Rarities says it will repay creditors if allowed to reorganize.

The downtown Minneapolis coin firm International Rarities Corp. filed a last-minute petition for bankruptcy protection as it headed for trial this week in Florida on allegations that it bilked an elderly man out of more than $335,000.

International Rarities, which is also under investigation by the Minnesota attorney general's office on allegations of consumer fraud, filed a Chapter 11 reorganization petition in Minneapolis on Friday afternoon, listing assets of $1,353,295 and liabilities exceeding $3 million.

That effectively stayed a federal lawsuit brought by Dean Dellinger, 88, of Milton, Fla., who alleges that the coin company cheated him on a series of gold and silver trades. International Rarities disputes the allegations.

Joe Zarzaur, Dellinger's attorney, said Monday that the coin firm's bankruptcy petition was "purely a tactical thing, in my opinion, to weasel out of a trial date."

Zarzaur noted that his client is not getting any younger, and said he will ask the judge to allow the lawsuit to go forward despite the bankruptcy petition. Fraud is not dischargeable in a bankruptcy, Zarzaur said.

The bankruptcy petition also may stay a lawsuit filed earlier this month by 74-year-old Barbara Shannon, a retired nurse and widow in Ravenswood, W.Va. Her lawsuit, filed in Jackson County Circuit Court, alleges that International Rarities failed to supervise former salesman Tory Hughes, and that he took her files when he left the company and defrauded her in a series of trades. She's seeking $235,000 in damages from International Rarities.

International Rarities' bankruptcy petition lists 29 creditors from around the country who sent in just over $1 million for coins but never got them. It also lists more than 21 creditors with potential claims of nearly $900,000 from investments they made in International Rarities Holdings Inc. of Las Vegas.

David Marion, who owns International Rarities, set up the holding company in a failed plan to take the coin business public and expand nationwide. Despite heightened interest in precious metals as a hedge against inflation, International Rarities' revenue declined. The bankruptcy petition says the business brought in $24 million in 2009, but just $15.7 million in 2010.

International Rarities issued a statement Monday in response to a reporter's questions and said its reorganization plan includes "100 percent payback to customers of International Rarities Corporation and investors in International Rarities Holdings."

"IRC is working with a well-established turnaround team and looks forward to emerging from this unfortunate event and making both customers and investors 100 percent whole," the statement said.

The company blamed the failure of its expansion effort on "outside experts" Marion hired to help manage and market the investment offering.

A Star Tribune investigation of Twin Cites coin dealers this spring found that some firms hire salesmen without regard to criminal backgrounds, in some cases including coin fraud convictions.

International Rarities has a legacy of hiring ex-cons. Court records and sources in the industry show that over the years, its workers have included at least two dozen people with criminal records that ranged from serial drunken driving to drug crimes, fraud, forgery and bank robbery.

The bankruptcy petition indicates that Marion stepped down from his role as president and CEO in July, along with his chief operating officer, Catherine Chambers. Both are listed among the creditors with unspecific indemnification claims. Marion also says he's owed $454,533 from a loan he made to the company.

Stephen J. Hastings of Eden Prairie is listed as president of the firm. The Internal Revenue Service filed a tax lien against him in May for $257,458, and the state of Minnesota filed one last October for $27,943. A spokesman said Hastings' tax issues are related to another turnaround effort he worked on, and that he is addressing them.