Can I escape bills by opening up a new company doing the same as the old company?

[miogpsrocks]

What is the name of your state (only U.S. law)? Salt Lake City, UT


I was considering purchasing a company however after looking at the financials, I found they were underwater in massive amounts of debt.

Can I buy the assets but leave the liability and just open a new company name that does the exact same thing as the old company while wiping away all the debt?

Basically move over all the employees, equipment, technology under a new name ?

Please let me know if this would work or why not?

Thanks.

 

[latigo]

What is the name of your state (only U.S. law)? Salt Lake City, UT

I was considering purchasing a company however after looking at the financials, I found they were underwater in massive amounts of debt.

Can I buy the assets but leave the liability and just open a new company name that does the exact same thing as the old company while wiping away all the debt?

Basically move over all the employees, equipment, technology under a new name ?

Please let me know if this would work or why not?

Thanks.

Beware of Utah's Uniform Voidable Transactions Act - Title 25 Chapter 6 of the Utah Code!!!

I suggest that you read the Utah Act, particularly Section 303 and learn how the creditors can seize any such assets and leave you holding nothing but a copy of a writ of execution!

But why are asking total strangers advice on such a critical business decision rather than your attorney?

It doesn't speak well of your business acumen. In fact if you a modicum of business experienced you might well know of such laws that permit the voiding of transfers of a debtor's assets made in fraud of creditors. All fifty states have them.

 

[LdiJ]

What is the name of your state (only U.S. law)? Salt Lake City, UT


I was considering purchasing a company however after looking at the financials, I found they were underwater in massive amounts of debt.

Can I buy the assets but leave the liability and just open a new company name that does the exact same thing as the old company while wiping away all the debt?

Basically move over all the employees, equipment, technology under a new name ?

Please let me know if this would work or why not?

Thanks.

It is possible to just purchase the assets of a company. You would not be violating anything if they are purchased at or near fair market value. Many purchases are structured that way when the original company has a lot of debt. It is not at all uncommon.

Nevertheless, you probably want to have an attorney on board to help you draw up a proper purchase agreement. You will also probably need some help determining the fair market value of the assets.

 

[STEPHAN]

Get a lawyer.

Have you tried negotiating the debt?

 

[Shadowbunny]

Get a lawyer.

Have you tried negotiating the debt?

STEPHAN, would OP have standing to negotiate the debt since he's not the debtor?

 

[commentator]

Seriously, do you think you're the first person who's ever thought of this in Utah?

 

[CTU]

Seriously, do you think you're the first person who's ever thought of this in Utah?

The entire population of Cell Block 8 thought about it a whole bunch

 

[LdiJ]

The entire population of Cell Block 8 thought about it a whole bunch

Again though, there is nothing wrong with buying only the assets of a company if they are being purchased at fair market value. Its a common business practice.

 

[miogpsrocks]

Beware of Utah's Uniform Voidable Transactions Act - Title 25 Chapter 6 of the Utah Code!!!

I suggest that you read the Utah Act, particularly Section 303 and learn how the creditors can seize any such assets and leave you holding nothing but a copy of a writ of execution!

But why are asking total strangers advice on such a critical business decision rather than your attorney?

It doesn't speak well of your business acumen. In fact if you a modicum of business experienced you might well know of such laws that permit the voiding of transfers of a debtor's assets made in fraud of creditors. All fifty states have them.

I am being told that "There is nothing wrong with buying only the assets of a company if they are being purchased at fair market value. Its a common business practice."

So doing something that is a common business practice and you say that "if you a modicum of business experienced you might well know of such laws that permit the voiding of transfers of a debtor's assets made in fraud of creditors and It doesn't speak well of your business acumen."

Why would paying fair market value for the assets and leaving behind the liability make me a criminal and an idiot when its a standard business practice?

Seem like half the people here think its a genius move and the other half think its criminal activity.

 

[LdiJ]

I am being told that "There is nothing wrong with buying only the assets of a company if they are being purchased at fair market value. Its a common business practice."

So doing something that is a common business practice and you say that "if you a modicum of business experienced you might well know of such laws that permit the voiding of transfers of a debtor's assets made in fraud of creditors and It doesn't speak well of your business acumen."

Why would paying fair market value for the assets and leaving behind the liability make me a criminal and an idiot when its a standard business practice?

Seem like half the people here think its a genius move and the other half think its criminal activity.

It really is a common business practice. Now, the title of your thread "Can I escape bills by opening up a new company doing the same as the old company?" does tend to make it look like you are attempting to do something questionable, but I think that was just poor wording on your part. It would be potentially criminal, if you were say the brother of the business owner and he was selling you the assets at pennies on the dollar. However, if its an arm's length transaction, and you purchased the assets at fair market value, then its perfectly legit. Heck, its perfectly legit to purchase the assets at fair market value, even if its NOT an arm's length transaction. Its just that the transaction would be more likely to be questioned in that case.

Those who though it was potential criminal activity interpreted your first post as a transaction that was not arm's length and was pennies on the dollar. I interpreted the opposite.

 

[miogpsrocks]

Seriously, do you think you're the first person who's ever thought of this in Utah?

I don't think so since I'm being told is a fairly common business practice. You seem to imply there is a problem with it?

 

[miogpsrocks]

The entire population of Cell Block 8 thought about it a whole bunch

Do you have any information of someone who tried this and is in jail?

I have been told its legal and a common business practice. Why do you believe otherwise?

Thanks.

 

[STEPHAN]

STEPHAN, would OP have standing to negotiate the debt since he's not the debtor?

Sure. You can negotiate. Comon practice in such a case. Done it many times.

 

[Zigner]

Do you have any information of someone who tried this and is in jail?

I have been told its legal and a common business practice. Why do you believe otherwise?

Thanks.

Perhaps you ought to do as the first responder in this thread posted (he happens to be an attorney.)

 

[Ohiogal]

It is possible to just purchase the assets of a company. You would not be violating anything if they are purchased at or near fair market value. Many purchases are structured that way when the original company has a lot of debt. It is not at all uncommon.

Nevertheless, you probably want to have an attorney on board to help you draw up a proper purchase agreement. You will also probably need some help determining the fair market value of the assets.

That is not what he is talking about here. He also wants all of the employees to work for his new company and such. You can't purchase people. It would be the same company with a new name in order to avoid debt.