Does using a newco protect me if the seller's corporation has hidden debts?

Not directly — what protects you from a seller's hidden debts is choosing an asset purchase over a share purchase, not which entity you use to make it. If you buy specific assets rather than the seller's corporation, its debts, including ones you don't know about, generally stay with that corporation regardless of whether your buyer is a brand-new numbered company or an existing business of yours.

Where a newco does add value is in isolating this acquisition from everything else you own. If an unexpected liability does somehow reach the buyer — say, through a registered lien on a specific asset you purchased, or an employee continuity issue — having used a newly incorporated, dedicated corporation as the buyer means that exposure is generally contained to that one corporation and the assets inside it, rather than putting your existing business or other assets at risk alongside it.

So the newco is really about containment of new risk, not elimination of the seller's existing risk — that comes from the deal structure and diligence. A business lawyer can confirm which protections are coming from which piece of your structure before you rely on either one.