Is it not a fact that in purchasing an entity a company not only purchases the assets but they also purchase the liabilities? 4 Answers as of February 20, 2012

If cell phone company A acquires cell phone company B (purchases all their shares) can company A legally abrogate the contracts company B has with their customers, such as cancelling their previously purchased minutes and institute their own plans for purchasing minutes which places them at a disadvantage, before the call time purchased by company B's customers have run their course?

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Law Office of Jared Altman
Law Office of Jared Altman | Jared Altman
I would say no, they can't, unless the contract lets them.
Answer Applies to: New York
Replied: 2/20/2012
Lutwin & Lutwin, LLP | Joel M. Lutwin
If it is a bulk sale all possible creditors have to be notified and generally the company remaining is liable for prior contracts- if the successor company wants to avoid this liability it would have had to notify all possible creditors and contract holders and even then it is doubtful that they can avoid the contracts of the company they purchased.
Answer Applies to: New York
Replied: 2/15/2012
Bruce Plesser | Bruce Plesser
As a general rule not taking into account any federal regulations involving phone companies, there is no privitity of contract between the new owner and old customers (in your cell phone example).
Answer Applies to: Florida
Replied: 2/15/2012
The Law Office of Stephen R. Chesley, LLC
The Law Office of Stephen R. Chesley, LLC | Stephen R. Chesley
As a general rule when one company purchases another company it does in fact purchase both the assets and the liabilities unless the purchase agreement states otherwise. The purchasing company assumes all liabilities of the selling company.
Answer Applies to: New York
Replied: 2/15/2012
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