Legal Question in Business Law in Arizona

business line of credit from 1998

I co-signed a business line of credit application in 1998 with the owner of the business I worked for (business #1). The app. was approved for $100,000. The owner used the line for his other business's. In 2002 I bought business #1 from him using my new LLC. Part of the purchase agreement included that I would pay him $100,000 to pay-off the line of credit...I felt this to be unfair, because I never used the line to begin with...but I did it anyway so the purchase wouldn't be held up (total purchase price was $1,000,000). It turns out he never closed the account but continued to use it, and is now in default...and the bank is coming after me. I have impeccable credit and do not want this to end up on my credit report...do I have any recourse with the bank...knowing that I have in writing the fact that I paid him $100,000 to pay-off the line???


Asked on 6/24/08, 1:21 pm

1 Answer from Attorneys
James Jenkins Jenkins Law Center PLC

Re: business line of credit from 1998

Thank you for your message. The answer to your questions depends greatly upon the paperwork and contracts in question, which we cannot see. Frankly, this dispute over a business sold for $1million is greater and has more issues, including provisions of the documents involved, than can be properly addressed in this forum IMHO.

See a business litigation attorney at once, present all facts and documents, and proceed. Good luck. Sorry for your difficulty. This may be an example of the fact that a business purchase should be supervised by an attorney to make sure you are protected by the transaction and agreements.

best regards,

James D. Jenkins

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Answered on 6/25/08, 12:58 pm


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