Can a company acquire another that is in debt?

Can a company acquire another that is in debt?

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I have a new client with a few companies offering similar services.  One is currently non-trading with net liabilities.  He wants to merge this non-trading company with a profitable trading one.  Does this cause any particular issues? Obviously the trading company will acquire the non-trading company.  I understand the assets would usually transfer to the trading company and the non-trading company is dissolved.  Can the debt simply be transferred across so it becomes the trading company's liability?

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By johngroganjga
04th Jan 2014 20:26

The debt can only be transferred across with the agreement of the individual creditors.

It would help if you would explain why your client wants to do what you describe. What advantage he would derive from it, or what other purpose it would serve, is far from obvious.

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