Controlling Successor Liability in Asset Acquisitions

July 1, 2021Articles
NPCA Marketer | Summer 2021

Dinsmore partner Mark Boos was recently published in NPCA Marketer with his article "Controlling Successor Liability in Asset Acquisitions (Part 1)," an excerpt of which is below.

The so-called "rule of liability"(the Rule) is straightforward: The buyer of the assets of a business is not responsible for the debts and liabilities of the sellers.

This principle has long been one of the reasons buyers elect to purchase the assets of a seller rather than acquiring the seller itself in a merger for example. 

The protection afforded by the Rule is far from absolute, however. There are an increasing number of exceptions, any of which can result in a buyer inheriting some or all of the seller's liabilities, even in an asset deal. In short, just because you elect to purchase the real estate and inventory of an e-store operator or the supply contracts of a distributor, rather than the stock or membership interests of that operator or distributor itself, does not necessarily mean you'll take them free and clear of seller liabilities.