dump-buyback
Dump buyback, also called asset dump and buyback, is a method used by some business owners to avoid paying debts. In this scheme, the assets of a struggling business are sold to a friend or associate at a reduced or liquidated price, often with financing provided by the original owners. Then the business owners will “buyback” the assets from the friend under a new business organization without the original debt, and the original business will be dissolved. This leaves creditors without recourse to the transferred assets. Depending on applicable state statutes, judicial interpretation, and the circumstances of the transfer, a dump buyback may be treated as fraudulent.
[Last reviewed in September of 2025 by the Wex Definitions Team]
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