Legal Question in Business Law in Texas

buying a business owner bankrupt

I am thinking of buying a business that is for sale whereby the owner has filed bankruptcy recently. Will I be liable for their debts, and will I be liable for any unpaid taxes or future audit? Should I just by the business in pieces, such as, the name, inventory, lease etc.? The business is sole proprietor but we want to buy it and incorporate. Any info and advice would be welcomed.


Asked on 2/27/06, 3:35 pm

2 Answers from Attorneys
Joseph A. McDermott, III Attorney at Law

Re: buying a business owner bankrupt

As the owner of this sole proprietorship has taken bankruptcy, ALL his assets now belong to the bankruptcy estate -- including the business assets you want to buy. You'll have to deal with the bankruptcy estate/trustee and get the sale approved by the court. You'll most likely need a lawyer.

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Answered on 2/27/06, 3:51 pm
Charles White Charles G. White

Re: buying a business owner bankrupt

In addition to the advice given by Mr. McDermott, you will want to go over the financial history of the business and its tax returns. Because you do not want to be a follow-up casualty, you will want to make certain that the profit potential exists. Don't be too convinced that your skill and knowledge will take you much farther than the operator who already has failed. In addition to your attorney get your CPA involved in the analysis.

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Answered on 2/27/06, 4:34 pm


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