Question:
My company has acquired Company A (which is a single-member limited liability company). Before the acquisition, Company A had an outstanding debt owed to Company B. After my company completed the acquisition of Company A, Company B sent us a written request for payment of this debt. In this case, which party is responsible for repaying the debt? Is my company obliged to pay the debt on behalf of Company A?
Answer:
According to Clause 3, Article 77 of the Law on Enterprises 2020,“The owner’s assets must be distinguished from those of the company. The owner who is an individual must separate his/her personal and family expenses from those of the company’s President, Director, or General Director.”
Accordingly, in the case where your company has acquired Company A—a single-member limited liability company—the transfer only results in a change of ownership, not a change in the legal status of Company A. All rights and obligations, including debts owed to Company B incurred prior to the transfer, remain with Company A.
Therefore, the obligation to pay the debt to Company B belongs to Company A, not to your company. However, as the new owner, your company is responsible for directing Company A to duly fulfill its debt payment obligations in accordance with the law.
Consulting reference: Business Law Services.
