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Personal Guarantee for a company that was sold

Asked over 3 years ago - Los Angeles, CA

When I started a corporation 15 year ago, I signed a merchant agreement with a credit card processor. The standard merchant agreement has personal guarantee of the signatory.

I sold the remaining ownership to a partner 7 years ago. There was a bill of sale, and the purchase agreement stated that the buyer's responsible all liability after purchase date.

The company folded early this year. A few of customers claimed credit card charge backs, and the current owner failed to respond to the claims. Since company closed, the credit card processor can't draw from bank account to recover the charge backs. The current owner can't be located, therefore, the processor is seeking me for fees and charge backs.

I have no involvement with the company since I sold it. Am I liable for the debt?

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Attorney answers (1)

John M. Kaman

Reputation Level 20

Answered over 3 years ago. Criminal Defense Attorney in San Francisco, CA.

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You remain liable on your personal guarantee unless the lender canceled your agreement, or there were later financings were another guarantor was used. There is also the possibility that the statute of limitations may have run on these claims. You need an LA business lawyer to help you figure this out.

www.kamanlaw.com

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