Let me pose a question. Let's say a business is over it's head in debt but has a vast amount of sales. Could I

Question

take over the inventory (if it is sold to me by this company) and given money from the accounts recieveables to start this new company, and take over the branding of these products? Then the old company could file bankruptcy and get out of some of it's debt. I don't own any of the old company so I would not be liable for any of it's debt. What do you think?

The name is not copyrighted of the products.

Answer 1

Ok, so are you saying that the company sells you the inventory and gives you money and gives you the brand rights to the products? If so then you have a problem. The creditors of the original company need to be paid. When the bankruptcy happens, they are to be paid off first from the assets of the company. The money from accounts receivables and the brand rights are considered assets. The creditors can take this to court and argue that the original company did not have the right to give money and brand rights away since it owed so much. The court can rule in favor of this and you will have to give the money and the brand rights back to the company so they can go to the creditors to repay the debt.

Now, the buying of the inventory is legal as long as it is done at a fair value. The company cannot sell you the inventory at pennies on the dollar to avoid creditors from getting their hands on it. Companies have been sued for this in the past. Creditors are pretty good at figuring out when someone is trying to pull this stuff.