Legal Question in Business Law in California

Re: Business purchase

It depends on the details of your purchase. If you just bought an asset like the network, then the debts would not follow it unless there was some type of security agreement. I don't know of a security arrangement that would apply and, in any case, it is up to the creditor to show that they have some kind of lien on the asset. So, on an asset purchase, you would not normally owe anything.

The result might be opposite if you bought the whole business through a stock purchase. In that case, it is only the ownership of the business that changes hands and the business itself does not change. In that case, all of the debts and all of the assets remain exactly as is; only the owners change.

A third option exists. If the seller also sold, in the same transaction, all or substantially all of the assets of the business, the deal may fall with the Bulk Transfer Act (Article 6 of the UCC). Due to variations among the States, Article 6 is far from "uniform" today. So, it would be necessary to know the State law that governs the transaction and what was done to comply with Article 6 if that was necessary.

If I were giving advice here, I might tell my client to tell the hosting company to bill the previous owner or show you some documented reason why they think you are liable.

Be sure to see also: http://info.corbettlaw.net/lawguru.htm

Re: Business purchase

Depends on the terms of your purchase contract. You did cover all those issues in a thorough agreement, didn't you? Worst case is that you have to sue the seller after paying the host.