Legal Question in Business Law in Illinois

Sold business to someone near bankrupcy

I sold my restaurant to a qualified buyer through business brokers. We were recently shocked to learn he is about to file for bankruptcy. We recently found out that he borrowed $40,000 in a cash advance, from his credit card, to put the down payment on the business. Therefore, he is paying huge credit card bills, as well as owner-financing payments, in order to make ends meet. He also mentioned his attorney recommended that he sue the original owner (me) for fraudulant financial statements -- which is completely ridiculous, as all claims were true and shown during due diligence (bank statements, receipts, invoices, etc.)

Does he have a case? I've already sold the owner financing note to a financial company, so he does not owe me any money. However, I am concerned about being named in the suit, if there is one.

What do you all think?

Thank you


Asked on 6/01/07, 12:33 am

1 Answer from Attorneys
Noelle Ansley Noelle Ansley

Re: Sold business to someone near bankrupcy

A person can sue you for anything they like -- it doesn't mean it will have any merit. If you didn't do anything wrong, then you have nothing to worry about; however, you can still be sued and will still have to hire an attorney to deal with the situation and get you out of it. There really isn't too much you can do until you are sued, unless you wanted to initiate litigation yourself, which seems premature and unnecessary. If you don't already have an attorney, you might want to start shopping for one just in case he does sue.

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Answered on 6/01/07, 11:35 am


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