> No, if you buy a company, you buy it lock stock and barrel - that includes outstanding debts, existing deals, and obligations.
It depends on what you mean by "buy", and what you mean by "company".
Companies can assume the assets of another in a number of ways. The two most common are share purchase and asset purchase. If you buy assets, you do not assume liabilities. Whatever you use to purchase the company may pay off the selling company's creditors, but the new company assumes none of those liabilities. In a share purchase the obligations generally travel with the company.
The assumption of liabilities can also depend on whether the company being purchased is bankrupt or insolvent, as in those cases the shareholder rights often cease and in any case with very few exceptions lower in priority to creditors. It is often left to agreement of the parties (selling company, purchasing company, and creditors) or a bankruptcy judge to determine the rights through purchase.
The above is an oversimplification and somewhat jurisdiction-dependent in the commonwealth, but the gist is that a company can (and many often do) assume the rights of others without obligations.
Readers may find the story on Old GM and New GM interesting. Here is an article by my friend and colleague David Skeel, who testified before Congress on the unfairness of assumption of assets without first satisfying obligations in the case of the GM/Chrysler bankruptcies: http://www.wsj.com/articles/SB100014240527023037453045763616...
It depends on what you mean by "buy", and what you mean by "company".
Companies can assume the assets of another in a number of ways. The two most common are share purchase and asset purchase. If you buy assets, you do not assume liabilities. Whatever you use to purchase the company may pay off the selling company's creditors, but the new company assumes none of those liabilities. In a share purchase the obligations generally travel with the company.
The assumption of liabilities can also depend on whether the company being purchased is bankrupt or insolvent, as in those cases the shareholder rights often cease and in any case with very few exceptions lower in priority to creditors. It is often left to agreement of the parties (selling company, purchasing company, and creditors) or a bankruptcy judge to determine the rights through purchase.
The above is an oversimplification and somewhat jurisdiction-dependent in the commonwealth, but the gist is that a company can (and many often do) assume the rights of others without obligations.
Readers may find the story on Old GM and New GM interesting. Here is an article by my friend and colleague David Skeel, who testified before Congress on the unfairness of assumption of assets without first satisfying obligations in the case of the GM/Chrysler bankruptcies: http://www.wsj.com/articles/SB100014240527023037453045763616...