Question: Successor Liability

by birdaise. Posted on Sep 12, 2020    0    6


I own a small retail business in AZ, and am in the process of selling. We have a purchase agreement polished (not signed), and are ready to turnkey. The one thing holding it up is pending litigation that my business has been involved in since 2017, of which my business is considerably smaller than the other two defendants involved. The buyer does not want to assume the risk, and is requesting that it be resolved prior to finalizing the sale.

I am looking for experience in this scenario, in which I could assure the buyer that they will not be involved, or at risk, considering they will only be purchasing my assets, FFE, customer lists, etc. There is no legal business purchase, nor a reassignment of the lease I am currently in. Any suggestions as to what actions to take, resources available to gather information, or strategic moves I could make would be much appreciated.


Comments

DolemiteGK 3

Asset purchase? You're right They wouldn't assume your corporate liabilities.

Have the buyer talk to his lawyer, who should explain that doing this as an asset purchase would only have liabilities if there were loans on assets

  birdaise 1

I spoke with his attorney this morning, who is reinforcing the request to resolve litigation first. My attorney is still baffled they don't understand they won't be held liable also.

Do you happen to have any resources I could reference towards the buyer to prove that this is the case?

martin33t 1

Needs another lawyer. This is well known, that’s why asset purchases are preferred.

  birdaise 1

Is this typical in asset purchases? Would an outside attorney reinforce the facts of the purchase, assuring the buyer of his protection?

UncleFishKiller 2

Your buyer is no different than a customer at this point. Their objection makes me wonder if maybe they're not trying to stall the deal or negotiate for a better price.

  birdaise 1

At this point, I could fire sale my merchandise and walk away, and they know that. We have a final draft of the purchase agreement, being stalled by this issue.