Legal Question in Business Law in California

Can you transfer liens and debts of a corporation to a new owner? Could you do this through a specific contract?


Asked on 2/06/17, 3:45 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Unfortunately, your question has about ten different answers, depending upon exactly what you mean. First, liens and debts are not the same, and what works for one doesn't necessarily work for the other. Next, a new owner of what ........ of the liens and debts, or of the corporation? Also, is the corporation the debtor or the creditor on the debts, and the grantor or grantee of the liens? Next, what is the relation of the "you" to the corporation.....its current owner? Finally, what do you mean by a "specific" contract? Are you asking if there is a preprinted form contract you can buy to do whatever you're referring to, or do you simply mean a contract with very definite language? I would love to give you a useful answer, but about all I can say is that if all the affected parties agree to the terms of a transaction, it's usually possible to carry out their intention with a written contract executed by all of them.

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Answered on 2/06/17, 4:33 pm

While I agree with Mr. Whipple that there are many different answers, the simple one is that if you are talking about selling the corporation, then the question is pretty much irrelevant. A corporation that has debts and liens is a legal entity by itself. It is the debtor, or creditor, not the person or people who own it by owning shares. If you sell a corporation it remains the creditor or debtor. The person or people who buy the shares don't become the creditor or debtor. Now if it is a small corporation and the owner has had to personally guarantee the loans, then it becomes a LOT more complicated and you will definitely need a lawyer to walk you through the sale of the corporation.

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Answered on 2/06/17, 6:42 pm


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