More details to this question:
I am buying the assets of a business which are income producing assets (customer contracts) along with good will etc. We were a couple days from closing and the bank pulls a ucc on the sellers business and requiring then to pay off their liabilities (chase line of credit) before they will close the loan. I'm not buying their entity just the assets. My question is how is this right and can a business sell assets of the business with a ucc against the business despite I'm not buying the business. This is also an SBA loan not sure if this matter
1 ANSWER
The UCC lien isn't against "the business", the lien is on the assets of the business, just as a home owner secures the loan he/she uses to buy the h ouse through giving the mortgage a lien on the house. Thus, the seller could theoretically sell the assets, but the sale would be subject to the lien, meaning that if the debt (line of credit) is not paid, the creditor (chase) could, despite the sale, force those assets to be sold to pay the seller's debt. This is analogous to a house closing where the sellers have to pay off their old mortgage before the buyer's mortgage lender will loan the money to the buyers to buy the house.
Answered on Apr 02nd, 2021 at 10:29 AM