This article are provided for information purposes only, and are not intended as legal advice.

What happens when the new owner defaults on a payment?

December 4th, 2008

If you provided the new owner of the business a vendor take back loan, is it secured?  Did you have to subbordinate to the bank?  Will you have to take out the first lendor to take over the company?  What protection did you request in your purchase and sales agreement. Remember, you need to be very specific in your purchase and sale agreement. They are very important when things go wrong because if you did not protect yourself, you may have not defined what happens in event of a default, do you have to petition them into bankruptcy or can you try to take back the customers?  Is there anything left of the business or did the new owner destroy the goodwill of the business?  Do you sell your business a second time and try to recover something or do you rebuilt it back up and defer your retirement for several years?

If you try to take over the company but the customers have all left, what are you getting back?  If you are not active in the business are you allowed to monitor the business so that you can see when things are getting bad.  If you have no monitoring, you will find out that the business has deteriorated only after it has gone beyond repair.

Filed under: Sell a business — Gary Landa @ 9:31 am

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