business and liability

What is the name of your state? IA

This is kind of hard to explain, but I'll do my best. If an owner of a business decides to sell the business to someone else, who is legally responsible for the debts incurred prior to the sale of the business? Let's say the business owes money to 100 different people, would the new owner of the business be responsible in any way?

Amanda_23 said:

What is the name of your state? IA

This is kind of hard to explain, but I'll do my best. If an owner of a business decides to sell the business to someone else, who is legally responsible for the debts incurred prior to the sale of the business? Let's say the business owes money to 100 different people, would the new owner of the business be responsible in any way?

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**A: the liability could be passed or the new owner could just buy the assets and none of the liabilities. It is all subject to negotiation provided that the money owed is to unsecured non governmental creditors. It gets more complicated if the biz owes secured creditors such as lenders that hold mortgages on real property, secured fiinancing on FF&E with recorded UCC financing statements, nontransferrable equipment and real estate leases etc. State and Federal taxes, SS and UE liability incured generally can not be passed to a new owner.