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Customer sells to another company
December 11, 2020
Customer sells to another company
            I’m sure many other companies have had this issue but I just ran into my first monitored customer that has sold out to another company. The big question is who is responsible for billing and more importantly, what’s the best way to proceed?  
            I’m sure the original customer who signed the contract is the one responsible. 
            I’m also pretty sure that to be civil about it I should contact the new owner and suggest they sign a new contract or hope that they will accept the existing contract, which I don’t think will happen. Just looking for the smoothest transition.
  Thanks for all you do for our industry.
            I addressed this issue in my October 29, 2020 article, which I copy below.
            The party to the contract is still on the hook, as you opined, though since I haven’t seen the contract that answer could change, for example, if the subscriber had the right to assign the contract and be relieved of further performance.  You should be mindful that you should not continue to provide any service to a new occupant [end user] of the premises unless you have a contract with that end user.  
            Your options with the new occupant is to have that occupant assume the old contract or enter into a new contract.  Otherwise, terminate all service immediately.  If you are monitoring fire notify the AHJ of termination.
            If you have already provided any service to the new occupant then you should notify the occupant that you are terminating service immediately.  That means upon giving the notice you terminate service, not later that week, not the next day, not unless they contact you, not unless they sign a new contract.  Your notice says that your service is terminated upon receipt of the notice.  
            Then you have to do something very important, you have to terminate service.  Do not provide any service once you say you have terminated.
            Here is the response from the October 29, 2020 article:
This is a common issue with a bunch of twists here and there.  In this statement of facts we know that:
  *  there is a Commercial All in One
  *  subscriber sold its business to another entity
  *  the new entity bought the old company and made it a subsidiary
  *  the new entity paid for alarm services post-closing
            Under these circumstances the new entity would be liable and would have to continue with the contract; or you can pursue it for collection.  It’s unusual that one company would buy the old company; normally it’s an asset purchase deal excluding liability of the selling company.  Keep in mind that in your case the buying entity could have purchased the assets and then changed its name to the name of the selling company.  
            But in your case you also have continued payment after closing.  You have excellent argument for liability on more than one theory:  transferee liability; assumption of the contract; 
            Seems like it’s worth a shot.  We would likely bring an arbitration proceeding against the old and new companies.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301