Thinking of selling a business in Minnesota? Whether you selling to a person or another company, or even shutting down, there are many things you need to take into consideration regarding your commercial insurance policies.
If you are planning on selling soon, here is what you need to know.
About Cancelling or Transferring Your Plans
If you are getting out of the “business” of owning a business completely, you will need to cancel the policies that you had regarding your business. If you are planning on starting another company right away, you will still need to work with your commercial insurance provider to build a new plan. Keep in mind that moving business insurance is not like transferring auto or homeowners insurance. A new plan will need to be built based on the business you are opening, what industry you are in, which state it is located in, and many other factors.
Work with your attorney and commercial insurance provider to end your current plan and start building a new one.
Prepare for Any Bonds You May Need
Business owners in Minnesota who are selling their business may need to acquire a special type of ERISA bond called an ERISA withdrawal liability bond. These types of surety bonds are different than standard ERISA (Employee Retirement Income Security Act) insurance and are normally used when a company is sold to another party and the former entity ceases to exist. These bonds protect employees in case there are unfunded pensions or liabilities, helping to make them financially whole. These types of bonds can also be known as 4204 surety bonds.
Keep in mind that these bonds are only applicable if you have a pension or any unfunded liabilities attached to your business.
Can I Still be Sued After I Close My Business?
In short, yes, you can still have a lawsuit brought against you even after you sell or close your business. Just because you are no longer a part of the company does not mean your risk goes away completely. This can be a tricky process to navigate depending on whether you have sold your business or have closed it completely. Anyone who has been a customer in the past can still possibly bring a lawsuit against you.
Need Bonds or Commercial Insurance?
The Patrick J. Thomas Agency is a leader in Minnesota surety bonds and commercial insurance. Whether you are closing your business, starting a new one, or both, you can count on us to help you get the coverage and bonds you need throughout the process. Get in touch with one of our agents today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.