M&A - Assets Sale Automatic Transfer of Assets
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Are any assets or liabilities automatically transferred in an asset sale that cannot be excluded from the purchase?
Panamanian labour laws provide that when all or the majority of the assets of a company are sold, the seller and the buyer remain jointly and severally liable for a period of one year after the acquisition for labour liabilities that arose before the acquisition.
Assets are generally transferred subject to existing tax liabilities and liens or encumbrances. The buyer must ensure that all taxes on the assets are paid before transfer. A tax clearance certificate (paz y salvo) is required for the registration of the transfer of title of assets that are subject to registration, such as real estate property and certain movable assets. The Public Registry only registers the transfer of title after receiving evidence that the payment of the relevant taxes is up to date.
Assets subject to liens or encumbrances such as mortgages can only be transferred with the prior written consent of the creditor.
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An extract of the Private Mergers & Acquisitions Guide, originally published by Thomson Reuters