Amrat Ganehi operated a hotel business in Central Texas for more than 25 years before he decided to purchase the Americas Best Value Inn in Harker Heights.
While trying to set up an account with Time Warner Cable after the purchase of the hotel was finalized on Nov. 19, he discovered the previous owner owed more than $3,000 to the company in past-due bills.
“They were three or four months behind in bills, and they (Time Warner) wanted me to pay all these things,” Ganehi said.
He asked the cable company representative, “Why didn’t you enforce (payment on) them? Why are you enforcing it on me?”
With many small businesses throughout Central Texas, determining who should be liable for making previous debts could be a common issue.
“It is something that happens regularly because there may not be a statement in their contract that determines who is responsible for unpaid bills,” said Meredith Armstrong, an attorney with MA Armstrong Law Firm PLLC in Killeen.
Clauses about who pays what after and before the sale should be negotiated as part of a purchase agreement, but it is a common practice for owners to make such deals using prewritten documents found on the Internet, Armstrong said.
“Buying and selling businesses is going on a lot around here, and I see a lot of people come through who have a one-page purchase agreement,” she said.
While the prewritten forms can suit some needs, Armstrong said, it is always better to work with experts in particular fields to help mitigate such issues before they occur. Such experts can handle what is particular to an individual’s situation as well.
It is up to purchasers to do their due diligence in researching the company they are going to buy, or at least hire someone who will do it for them, Armstrong said.
Time Warner wasn’t the only business to seek past bills from Americas Best Value Inn in Harker Heights after Ganehi took over, he said. Most collectors, however, did go after the previous owner once Ganehi explained the situation. In the case of Time Warner, though, Ganehi said he had no other choice than to pay the bills. He said taking the issue to court with the previous owner could cost him more than the unpaid statements.
He didn’t seek an attorney when purchasing the business, he said. “There is a lot of transactions that have not been executed by attorneys, and the results of that can unfortunately result in problems. ... It is a lot cheaper to do it right the first time than have to correct something later.”