Rex Incorporated, engages in an asset purchase of Tex Inc. In the process, Rex states that it will pay off all of Tex's creditors. After the transaction is complete, Rex Incorporated states that it will no longer honor that promise. What most likely be the outcome of this situation?
A) In all asset purchases, the debt of the target company never transfers to the buyer therefore Rex will not have to pay the debt despite the promise.
B) In all asset purchases the debt of the target company always travels with the buyer. Therefore, Rex will have to assume the debt of the target company.
C) While generally the buyer does not assume the debt of the target company when the buyer expressly agrees to assume the debt of the seller then the buyer will have to pay the debt.
D) Tex is solely responsible for its own debt and Rex will not be obligated to pay under any circumstances.
Correct Answer:
Verified
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