What to do if I want to buy the assets of an ailing business and reopen under a new LLC?
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What to do if I want to buy the assets of an ailing business and reopen under a new LLC?
The company only owns equipment. It rents it’s space and is nearly in bankruptcy due to bad management. Can I buy all the equipment and physical assets (there are no liens) and re-open the business with the same name at the same location under a new LLC? Am I going to experience any issues with fraud or legalities in relation to the old company? The name I want to keep isn’t even the actual name of the current S-Corp. It’s a DBA associated with the S-Corp. Just thought I should check, grey area with it being the same location and name.
Asked on July 22, 2011 Colorado
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
You can buy the assets /equipment only of this business that is in poor financial shape. Make sure that the written contract specifically states you are buying assets only, the assets/equipment that are being bought are specifically listed, that not liabilities are being acquired, and that you do a UCC search to make sure that the assets/equipment being purchased have no liens upon them and are owned free and clear.
You can also buy the lease or receive an assignment of it from the business. But, before doing that, you should first meet with the landlord about it and get written approval for the lease after knowing all its terms.
You probably should use a whole new name for your business that you want to start at the location. If the old one goes into bankruptcy, you do not want to have any association with it for obvious business reasons.
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