If you buy 50% of a company that has filed for Chapter 7, do you assume 50% of company secured and unsecured loans?
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If you buy 50% of a company that has filed for Chapter 7, do you assume 50% of company secured and unsecured loans?
Asked on January 7, 2015 under Bankruptcy Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
A definitive answer depends on how the company was purchased and cannot be answered in the abstract. As general guidance:
1) If you buy 50% of the stock of a company, you are *not* liable for the company's loans--stock- or shareholders are not responsile for the debts of a corporation.
2) If you buy a 50% interest in an LLC, you again are not typically liable for the company's loans--members of an LLC are not responsible for the LLCs debts.
The exception to 1) and 2) would be if you executed some agreement(s) by which you agreed to guaranty or otherwise become liable for certain debts or loans; if you did, then that contractual agreement to accept or guaranty the debts is enforceable.
3) If you bought assets of the company, rather than the business entity, you would be liable for any debts attached to (secured by) those assets.
4) If you took assignment of any any contracts of the company, you would be liable any debts associated with those contracts.
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