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Who is responcable for past due invoice? Old owner or new owner

IllinoisNotice of Intent to Lien
Anonymous Subcontractor

I sold kitchen cabinets to McDowell of St Charles a General Contractor. I did not recieve payment in full. Since then they sold, new owners McDowell Acquistion said they only bought the assets not the liabilty and I should go after McDowell of St. Charles. Is this correct? Thank you

1 reply

Matt Viator
Construction Lawyer
Levelset Admin at Levelset
| 1,007 reviews
Mar 9, 2020
It's pretty common for a business to be acquired in a way where their assets transfer to a new owner but liabilities do not. However, the law generally prohibits the "sale" of a business in order to continue doing business while avoiding debts. So, if it seems like it's really the same business and only a paper transaction, then there's a fair enough chance that the "new" owner would still be liable. However, if there truly was a sale of assets to a third party, it'd be harder to recover from them. If the debt against the old owner was secured against its assets, and if those assets were sold to a new owner, then recovery might still be made against those assets. But, if there's nothing that really ties the new owner to the old business, that'd be an uphill battle. Ultimately, recovery may need to be attempted against the party who incurred the debt. But, licensed GC's must typically carry a license bond - so it's possible a claim against that bond could lead to recovery. Additionally, if the same personnel is running the new organization, then a complaint with the Illinois Department of Financial and Professional Regulation might be able to hold them accountable, at least. As a final note, keep in mind that it'd probably be valuable to reach out to a local Illinois attorney to help assess whether the purported sale actually occurred and/or whether the new owner may still be liable. Further, while effectiveness could be limited due to the apparent closing of the contractor's business, collections could be an option. And finally, if you can tie the cabinets directly to the individual property where the cabinets were installed, then it may be possible to pursue or at least leverage mechanics lien rights against that property.
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