1) The new owner of the company would NOT be liable or responsible for the loan if the new owner did not sign the loan agreement, unless a) the company was a corporation or LLC, b) the loan was not to the boss personally, but was to the corporation or LLC, *and* c) in buying the company, the owner bought the corporation or LLC (and not just its assets. If ALL those conditions are met, the company--not the new owner personally; the corporation or LLC--remains liable. But if the loan was to the old boss personally, only he is liable.2) Your brother could sue his old boss for the money: he would sue for breach of contract, or violating the terms of the loan agreement, which is a contract. While as you point out, if the boss doesn't have sufficient assets to cover the debt, your brother may not get his money back, there is not necessarily any reason to think that he does not at this point (and after all--if he sold his company, presumably he received some amount of money for it), and in the course of the lawsuit, there are legal mechanisms ("discovery") to get information about the boss's assets. So the thing to do is sue for the money. For $125,000 (at least, since that is the principal; more with interest, etc.), it would be worthwhile for your brother to retain an attorney to help him.