Legal Question in Business Law in Pennsylvania

Re: Lawsuit status after initiating company sold

It generally depends on what the claims are. Some causes of action are assignable. Some are not.

Re: Lawsuit status after initiating company sold

The defendant should propound document demands to "discover" whether the sales agreement permits the acquiring party to pursue the lawsuit as an asset of the former owner.

Re: Lawsuit status after initiating company sold

The answer to your question depends on the details of the sale and how it was structured. As my colleague correctly observed, some causes of are assignable and others are not.

Fro example, the lawsuit survives if the company was a corporation and the sale was simply accomplished by a stock transfer. The corporation is a legal entity that exists separately from the stockholders.

To get a better response, I suggest posting more details about the nature of the sale, the type of business and the type of the pending claim

Re: Lawsuit status after initiating company sold

The word "company" is a bit ambiguous. If you mean a corporation then the sale doesn't affect anything. Corporations continue to exist after they are sold, so your premise that the company "no longer exists" is not correct if you're referring to a corporation. The corporation can maintain the suit regardless of who owns its shares at any given moment.

With other types of companies (partnerships, sole proprietorships, etc.) the answer will often depend upon the nature of the lawsuit and the specifics of the agreement between buyer and seller.

Re: Lawsuit status after initiating company sold

I think all your answers so far are from California lawyers. I'm also a California lawyer. It appears to me that Pennsylvania law will apply to your question. In some areas, state laws are predictibly consistent from state to state; in others,one might expect wide differences. The assignability of causes of action (sometimes called "choses in action") is likely to vary from state to state, so I'd recommend getting an opinion from a PA lawyer.

If the company was a corporation and it literally no longer exists, that could be the result either (1) of its formal dissolution after selling its business, or (2) its disappearance following merger into the buying corporation or the buying corporation's nominee. The method of going out of existence may be important to know in further discussions with attorneys. Also, you need to know whether the business sold and the acquiring business were corporations or something else, and whether the sale was accomplished by sale of stock or by sale of assets.

My guess is that if the value of the lawsuit was pretty high, the lawyers involved in the sale of the business and/or the instigation of the suit will have figured out a way to allow the cause of action to survive.