Legal Question in Business Law in California

Credit Card Merchant Collect on Personal Guarantee of Sold Company

Am I liable for debt of a company I sold 5 year ago?

I sold a remaining ownership to a partner several years ago. There was a bill of sale of my ownership, and the purchase agreement had stated that the buyer's responsible all liability after purchase date.

During the partnership, I signed a merchant agreement with credit card processor. The standard merchant agreement has personal guarentee of the signatory.

Currently, the company's defunct. Since the credit card processor can't locate the current owner, they are seeking me to cover fees and charge back of the defunct company. Am I liable for the debt?

Thank.


Asked on 9/26/08, 7:54 am

2 Answers from Attorneys
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Credit Card Merchant Collect on Personal Guarantee of Sold Company

After 5 years they would not win a lawsuit if you defended it properly. The legal time limit is normally 4 years. So they will try and trick you into paying, or making a promise to pay, in order to thereby extend the legal deadline for suing you. I would ignore them, or have a lawyer write them a letter telling them to go pound sand. If they do sue you, you will need to defend the lawsuit, and also to counter-sue the buyer. Maybe you or your attorney will have more luck finding him.

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Answered on 9/26/08, 11:23 am
Terry A. Nelson Nelson & Lawless

Re: Credit Card Merchant Collect on Personal Guarantee of Sold Company

Duh. Sorry for the sarcasm, but of course you are, unless you got a release and waiver from the card company at the time. However, they probably can sue and collect only on billings that are less than 4 years old or so. You also would have a counter claim for indemnity against the buyer of the company. Feel free to contact me if you get serious about getting legal help in this.

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Answered on 9/26/08, 1:31 pm


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