Hacker News Reader

Comment by taneq | Hacker News Reader

Companies can purchase assets off other companies (up to and including the company name and trademarks etc.) without taking on the legal obligations of those companies. It's crappy but true.

(I had a shower re-sealed by a company that gave a 5-year guarantee. Four years later it was leaking again, and I got in touch with them to have it redone under warranty. After stonewalling me for weeks, they finally came back with "we purchased this company off its original owner but didn't take on any of their obligations so you have to find the original owner and get them to repair your shower", and as far as I could tell that's actually a thing you can do.)

View on HN

How is that shower legal in any sense? The "company" which did the work no longer gives a guarantee?

Simple enough. When a company ceases trading, nobody expects the people who bought their office equipment to honour outstanding warranties, or even the people who bought out the lease on the building they traded from. If another company buys the design of their products and continues making them, that doesn't oblige them to honour warranties for the products they didn't make.

This is exactly the same thing, except it was the company name that was sold. Acme Corporation sold the Acme brand to RoadRunner Inc, then quietly ceased trading taking all their liabilities with them.

Yep, this was their claim. I don't know if I'd have been able to make it stick in small claims court but it was absolutely guaranteed to cost me more than $500 to find out so I just paid another, more reputable (for now, anyway...) company to redo it.

Not worth fighting it, of course. But unless they bought the company out of bankruptcy, you don't get to choose to buy a company's assets but ignore their liabilities.

That would be like buying a company that owes money on a building and telling the bank that you won't be making payments because you are keeping the building, but not the debt.

That's why a big part of mergers and acquisitions is researching all the possible liabilities that may exist for the company to be acquired.

Thanks for the reply. I was under the impression that businesses have a legal business name that is registered when you register the business. If the name isn't an identifier then what is?

Reply on news.ycombinator.com