Legal Question in Business Law in Michigan
Sale/Transfer of Small Business
When a small retail business is sold, do the NEW owners assume the past debts and liabilities of the Seller in relation to the business only? The Seller has a Sales Tax lien on herself/DBA and still owes a few creditors/suppliers. The business is NOT incorporated and is owned by a PERSON under a D/B/A status. The Seller is looking to settle all past debts, etc, at time of Close on Sale of Business. The Buyers are buying the business name, the Good Will, fixtures, etc. No Real Estate is involved. A new lease is being drawn for them.
3 Answers from Attorneys
Re: Sale/Transfer of Small Business
You may purchase the assets only of the business, but I would have the tax-lien paid out of the proceeds of the sale at closing. If not, I would have a very specific indemnity agreement drafted wherein your seller would indemnify you against any claims for taxes. If the seller is financially well off and not insolvent, this may be an option, but paying the liens off at closing is still preferable. For more info., please contact me at (248)851-3171.
Re: Sale/Transfer of Small Business
This is NOT something you can do with a free on-line service. You need to get a good business lawyer and sort this out with her. Whether the debts travelk or not will depend on what is agreed to, because contracts may have been drawn up by the business, as opposed to by the individual owner(s). Do not buy/sell without getting competent advice from a business lawyer (NOT, a general practitioner)
Re: Sale/Transfer of Small Business
Often times, buyers of a business believe they are simply purchasing the assets and name of the business. But later find out they are subject to what is known as "successor liability". To help avoid this type of liablity, due diligence should be conducted before the sale is closed and a solid purchase agreement drafted. Our firm specializes in representing businesses of all sizes. If you wish to discuss your situation in further detail, I can be reached at 586-979-7302.
Janet M. Ziulkowski
(586) 979-7302
(www.ziulkowskilaw.com)
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