Company Credit under new ownership

[CredStudent]

We are getting ready to finalize a purchase for a company which I have worked for for 8 years and my soon to be new partner in the bussines has worked for the company for roughly 30 to 40 years. The company is an electronic manufacturer of specialized equipment which has been successfull since 1967. The company currently has great credit and we have never missed a payment or been late on a payment. As of right now the company has more than enough credit. Does anyone know what will happen to the credit rating and how the overall view of creditors will change? Our lawyers have told us we should close out all the accounts and reopen them. Just trying to get an idea of what will happen.

[CredStudent]

also, it is an S-Corp

[Anonymous]

If the credit accounts are in the company name without personal guarantees, the impact should be nil. Did your lawyers explain why they think you should close and re-open the accounts?

[CredStudent]

They want to "limit liability", essentially they want to make sure ALL ties to the old ownership are severed w/o room for a mix up.

[Anonymous]

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@CredStudent wrote:

They want to "limit liability", essentially they want to make sure ALL ties to the old ownership are severed w/o room for a mix up.

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That would only be an issue if the credit accounts were issued in the previous owner's names or personal guarantees were provided. If that is the case, than they are right.

[myjourney]

2 things are at play here

1) the new management can't use any credit personally in the previous owners name 

2) you don't want the previous owner getting more credit in the company name and honestly you would never know until the account was in default because no one would contact you because you aren't listed on any of his paperwork as an officer of the corp (articles of Inc) and aren't authorized to manage or change any account info on an existing account.

Thus the lawyers told you to close out all accounts and start fresh