Legal Question in Business Law in California

Did you have an agreement for purchase and sale of the business? What does it say about employees and prior debts? These issues are usualy specifically addressed. Is this a corporation, an LLC or a sole proprietorship? What exactly did you buy? Stock? LLC interests. Just equipment and a name?. We need a little more information to provide a meaningful answer.

Indeed, more information is required. Whether the business is a sole proprietorship or an entity such as a corporation may be crucial.

The lady didn't work for you, to be sure....but whom did she work for? Probably for the business, which you now own. So, settling up with her may fall on your financial shoulders, although more likely the direct responsibility for the indebtedness belongs with the business, not its owner.

Many businesses, especially those with employees, are set up as corporations, LLCs, partnerships, and so on, and they are obligated to pay their debts irrespective of who owns them at any particular moment in time. Can you imagine General Motors refusing to pay its workers because some of its stock had been sold, and therefore the corporation had different owners and that excused the corporation from paying its debts?

Most sales (or "take-overs") of businesses are accompanied by the buyer's careful investigation of the assets and liabilities of the business, professional review of its books including employment and payroll information, verification of sales, and other due diligence. Then, the purchase agreement usually contains representations by the seller that the business has no undisclosed problems, and assurances by the seller that, if indeed something was omitted, the seller will indemnify the buyer.

If you didn't have a carefully-negotiated acquisition agreement, you may be in trouble, but the trouble may affect the business itself rather than you personally.

You need to contact a business lawyer ASAP.