I disolved a corporation that owned a time-share

[cylon58]

Jurisdiction

Tennessee

My father owned a corporation that owned a time share his father bought in the 1980s. I started a new corporation and bought the assets of his company. One of the assets was this time share, but I never notified anyone regarding the time share about the buy-sell agreement we enacted. A few years later I started receiving mail requesting past due maintenance fees for the time share, but the mail was in the name of my father's corporation.

I got his and my mother's signatures and requested dissolution by the state.

Is there any way me or my parents can be held liable for these fees?

 

[Zigner]

My father owned a corporation that owned a time share his father bought in the 1980s. I started a new corporation and bought the assets of his company. One of the assets was this time share, but I never notified anyone regarding the time share about the buy-sell agreement we enacted. A few years later I started receiving mail requesting past due maintenance fees for the time share, but the mail was in the name of my father's corporation.

I got his and my mother's signatures and requested dissolution by the state.

Is there any way me or my parents can be held liable for these fees?

It's possible...not to mention YOU as well.

 

[zddoodah]

Is there any way me or my parents can be held liable for these fees?

Yes. I could give you a bunch of statements that start like this: "It's possible that, if...," but I don't see the value in doing that. If you're concerned about possible personal liability, take the relevant paperwork to a local attorney for review and advice.

It's possible...not to mention YOU as well.

Hence why the OP asked if there was "anyway me or my parents can be held liable."

 

[Zigner]

Hence why the OP asked if there was "anyway me or my parents can be held liable."

Fair enough.
BUT...
As worded, the question was grammatically incorrect, which could explain my response

 

[adjusterjack]

Is there any way me or my parents can be held liable for these fees?

You'll have to read the original purchase contract. If your father gave a personal guarantee he could still be on the hook for unpaid fees, especially if assignment was prohibited by the purchase contract.

If assignment was allowed you would certainly be on the hook for the unpaid fees.

Again, read the original purchase contract to assess the risk.

 

[Tax Counsel]

Is there any way me or my parents can be held liable for these fees?

Certainly it's possible. But all the details of the assets and liabilities of the corporations and the details of the purported asset sale matters. Ask a lawyer in the state where the time share is located for what rights the association has to collect those fees.

Do you even use the time share? Do you want to keep it? If the answers are no, then start looking into returning the time share to the promoter or otherwise unloading it. Time shares, for the most part, are notoriously bad investments. They are only worth it if you actually use them.

 

[welkin]

If the buy-sell agreement is silent on the matter then generally speaking, when you buy a corporation's assets you also buy their liabilities.

 

[Zigner]

If the buy-sell agreement is silent on the matter then generally speaking, when you buy a corporation's assets you also buy their liabilities.

I disagree. If the agreement states that you are buying the assets of a company and is silent on the matter of the liabilities, then the default would not be that the liabilities are NOT part of the deal.

 

[Tax Counsel]

I disagree. If the agreement states that you are buying the assets of a company and is silent on the matter of the liabilities, then the default would not be that the liabilities are NOT part of the deal.

A lot depends on exactly how the contract is written, what the details of the transfer are, and what state's law applies. For example, some states still have bulk sales transfer acts that kick in when someone buys most or all of the assets of a company. In such a sale, there are specific notification requirements that the buyer and seller have to notify creditors of the deal so that they may take steps to protect their interests. Failure to follow those rules often means that the buyer ends up with those unwanted liabilities. This is one of the many reasons to consult a business attorney prior to buying/selling a business or most of the assets of a business. There traps for the unwary out there, sometimes very expensive traps, and unless you know the relevant state law really well so that you know all the traps to avoid, paying a lawyer some money to help you avoid them is money well spent.

 

[welkin]

I disagree. If the agreement states that you are buying the assets of a company and is silent on the matter of the liabilities, then the default would not be that the liabilities are NOT part of the deal.

Tennessee is a strict successor liability state. And whether the sale was an asset or stock (business) sale either the OP's new corporation or his father's corporation will be held liable for the maintenance fees.

 

[Zigner]

Tennessee is a strict successor liability state.

Based on @Tax Counsel's post above, I will step back from my earlier position that liabilities don't need to be mentioned in the agreement, but I would ask that you provide some sort of backup for your statement.

And whether the sale was an asset or stock (business) sale either the OP's new corporation or his father's corporation will be held liable for the maintenance fees.

First, while true in general, the fact is that, if a personal guarantee was signed, then the creditor can go after that guarantor directly without involving the corporation(s). Second, if the corporate veil can be pierced, then it's possible that the corporation(s) won't be involved. Third, if neither of the first two applies, then all I can say is "Well, yeah, who else would they go after?"

 

[cylon58]

Thanks for all the responses and ongoing discussion. I did not buy the stock of his corporation, only the assets.

 

[cylon58]

Certainly it's possible. But all the details of the assets and liabilities of the corporations and the details of the purported asset sale matters. Ask a lawyer in the state where the time share is located for what rights the association has to collect those fees.

Do you even use the time share? Do you want to keep it? If the answers are no, then start looking into returning the time share to the promoter or otherwise unloading it. Time shares, for the most part, are notoriously bad investments. They are only worth it if you actually use them.

I do not use it. My grandfather bought it in the 80s. The timeshare is also in TN.

 

[cylon58]

If the buy-sell agreement is silent on the matter then generally speaking, when you buy a corporation's assets you also buy their liabilities.

The buy sell agreement states:

Sellers shall sell, assign, and deliver to buyer and buyer shall purchase and accept, on
closing date, all the assets and properties owned by SELLER or in which
SELLER has any right, title or interest inchoate or otherwise, of every
kind and description, wherever located, including all property tangible or intangible and real or
personal, good will, processes, research and development projects, designs, patents, accounts
receivable, bank accounts, cash, securities, claims, contract rights, the right to use the names
SELLER or any similar name or names in connection with the Insurance
Business, and all other names, trademarks, or copyrights used by SELLER in connection with its business or products

 

[Zigner]

The buy sell agreement states:

Sellers shall sell, assign, and deliver to buyer and buyer shall purchase and accept, on
closing date, all the assets and properties owned by SELLER or in which
SELLER has any right, title or interest inchoate or otherwise, of every
kind and description, wherever located, including all property tangible or intangible and real or
personal, good will, processes, research and development projects, designs, patents, accounts
receivable, bank accounts, cash, securities, claims, contract rights, the right to use the names
SELLER or any similar name or names in connection with the Insurance
Business, and all other names, trademarks, or copyrights used by SELLER in connection with its business or products

You may have a problem then. That contract seems to also transfer the contractual responsibilities for any assets purchased.