Legal Question in Business Law in California

Re: Customer refuses to pay

The starting point would be to get out the contract by which the former owner sold you the business, and see what it says, if anything, about assumption of receivables and payables, indemnity, warranties, representations, etc. That legal boilerplate is in well-drafted contracts for a reason.

Next step would be to see whether this business sale was subject to the bulk sale provisions of the Commercial Code (sections 6101 to 6111 of said Code). Then, if compliance was necessary, and in many but maybe not most business sales it is, there would be an issue as to whether the buyer, the seller, or both were responsible for failure to comply. The Bulk Sales Act is basically a set of related laws that are designed to make sure creditors of a business get paid (or at least notified)when a business changes hands.

Once these issues are researched an understood, a lawyer would be able to say with some degree of confidence who needs to pay whom. Note that the Bulk Sales laws put a lot of the compliance responsibility on the buyer.