Q: Is it fraud to use a line of credit opened by the previous owner of a business I purchased in March of this year?
We paid bought a bar in March of 2019- DBA, liquor license, all assets connected to the business. All accounts including credit lines, utilities, vendors etc. were supposed to be transferred or closed. Recently, I received a statement that there is a line of credit in the business name that the old owner is still using. Since the business name legally belongs to us it is my understanding that all accounts are now our responsibility and can be used to fund the business. Under this assumption I wrote a check to our business account from the line of credit. The old owner is claiming fraud and has reported it to the bank who then took the money out of our account without even talking to us. What can I do?
A: If you just bought the assets of the company rather than the shares, probably not as it may be a personal line of credit.
It would be best to check with the Bank to see who took out this line of credit!!
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A: As you might imagine, the first part of the answer will rest in the written Purchase Agreement. The second part of the answer is what an experienced attorney will have to say. The third part of the answer is for you to send that document via email to an attorney of your choice as you schedule your free initial consultation by video call or telephone call. Shawn Jackson - Business Development Attorney.