I started an LLC with my father and sold in 07 to him and another member. What liability do I have if it goes under now.

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I started an LLC with my father and sold in 07 to him and another member. What liability do I have if it goes under now.

I had used the equity in my home as collateral for a small business loan and signed personal guarantee for a lease. The business has been operating under the other members for 2 additional years after I did a Bill of Sale stating that I sold my assets and liabilities to the LLC and that the LLC was to notify all parties of the change of ownership. I believe that the LLC may go under soon and want to be prepared for any problems that may crop up. The Bill of Sale was done without any Lawyers involved but was signed by all parties involved with the sale

Asked on May 18, 2009 under Business Law, Virginia

Answers:

J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I would have to have more information to provide you with a definitive response.  Howevrer, based on what you say here goes:  As far as your liability on the lease, your personal guaratee will keep you on the hook unless you were released when you sold the business.  I would have gotten the new owners to replace you on the lease - assuming you could get the other party to the lease to agree.  If the biz goes under you could be liable on the lease as a result of the personal guarantee.  As far as the debts that the company incurred since the sale, you should not be liable for those.  I would seek a lawyer to review the bill of sale and lease as i would ned to see them to determine the extent of your exposure.


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