Legal Question in Business Law in New York

Re: Buying Aged Corporations with history (not shelf)

Q. may I *legally* access these lines once I am the new owner?

A. If purchase of the corporation is through a stock transfer, and credit lines belong to the corporation, in a perfect world you should be able to use the credit lines. However, most loan agreements have language concerning operation and ownership of the corporation. So, you would have to read the language in the LOC agreement.

Q. Furthermore, may I apply for credit and use the tax-returns/age if/whebn asked for financials?

A. If the bank asks for tax returns of the corporation that you own, there is nothing wrong to produce those returns.

Two final item you did not think of. First, most LOC require a personal guarantee. The individual selling you the corporation probably does not want to guarantee a corporation when they do not have ownership or control.

Second, most attorneys frown upon a stock transfer since you would continue to be responsible for unknown liabilities.

Mike.

Re: Buying Aged Corporations with history (not shelf)

There are substantial risks inherent in such a transaction, not the least of them being that the existing corporation may have undiscovered liabilities which come back to haunt you.

Unless the seller not only is willing to but has the assets to hold you harmless against such potential liabilities, you'd be better off starting fresh.