7.M&A

Q8 (Unpaid Wages of Employees)

Regarding employees who are part of the business to be transferred, what happens if there are unpaid wages?

In the case of a business (asset) transfer, liabilities that are not listed as assumed in the business (asset) transfer agreement are not transferred. In principle, unpaid wages of the seller are not assumed, but there is a risk of a dispute based on a misunderstanding. Transferring employees must approve the change in their employer. Also, in order to avoid a dispute as to unpaid wages, it should be made clear in the consent document that the acquiror will not succeed to unpaid wages.

(Posted: January 27, 2012)