Question
A person sold his business. Among the conditions of sale was that the purchaser pay out all the creditors of the business. The creditors were not consulted. Now that the new owner is insolvent and has not yet paid the previous owner – who is responsible for those debts?
Answer
Muhtaram / Muhtaramah
In the Name of Allāh, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.
According to Shari’ah, in order for the transfer (Hawala) of a debt to be valid, besides the original owner of the business and purchaser, the creditor(s) must also consent to the transfer of the debt. Since the creditor(s) did not consent to the transfer of the debt, the previous owner of the business is responsible for those debts. (Raddul Mukhtaar vol.4 pg.321; Kuwait)
And Allah knows best
Darul Iftaa
Madrasah Inaa’miyyah
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