Author Topic: What to do about gift cards sold prior to transfer of business ownership  (Read 688 times)

jeromedawg

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Hey all,

My in-laws recently sold their business and when going to collect their mail, the new owner told them someone came in and used a gift certificate/card that was sold prior to her taking over the business. She requested reimbursement and my in-laws paid her back for it.

I'm assuming gift cards/certificates are a liability and that once the sale closes, those liabilities are the full responsibility of the new owner. Is that not the right understanding?

It seems like by agreeing to give her the money back, they've set an unspoken precedent where now she can just ask them for money back arbitrarily or for "good reason" in her own mind and expect them to compensate her.

In the original purchase agreement, there was a section about taking on any liabilities and this was left unfilled and I don't think there was any mention of gift cards/certificates at the time of sale.

How do you go about resolving a matter like this?   

GizmoTX

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Usually the sale of a business accounts for all receivables and liabilities, with the new owners acknowledging the net with the sale price & assuming responsibility for transactions after the transfer date. Gift cards are liabilities since they represent prepaid meals. Were these disclosed before the sale? If not, I would only refund those clearly dated before the transfer. Any blank (unsold) gift cards should have been destroyed (to distinguish them from any the new owners issue).