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APA’s Pennsylvania Choice of Law Provision Didn’t Apply to State’s Product Line Exception

M&A Stories December 02, 2020 Introduction A buyer of the assets of a manufacturing business is not responsible for claims arising from the use of products made by the seller, unless the buyer assumed the risk in the asset purchase

Posted in sale of product line, successor liability Tagged with: ,

Buyer of Treadmill Maker Did Not Assume Implied Merchantability Warranty

M&A Stories November 18, 2020 Introduction A buyer of a manufacturer often prefers an acquisition of assets as opposed to equity of the seller in order to minimize the risk of post-closing product liability claims. The deal This deal involved

Posted in assumption of a contract, implied warranty of merchantability, seller's warranty claims, successor liability Tagged with: ,

Franchise Asset Buyer Didn’t Inherit Seller’s Unemployment Tax Experience Rating

M&A Stories November 2, 2020 Introduction A company’s unemployment insurance liability depends upon its experience rating; the employee turnover history of the business. A buyer of the assets of a business usually starts with a lower unemployment liability than the

Posted in franchise sale, seller's unemployment experience rating Tagged with:

Buyer of Manufacturer’s Assets Has No Liability for Product Sold Before Closing

M&A Stories October 28, 2020 Introduction Management of product liability risk when buying a company is always an issue, even in an asset acquisition. Especially, if there is a history of seller products liability claims. The deal This deal involved

Posted in sale of product line, successor liability Tagged with: ,

$3.5 Million Buyer Refund – No Transfer of Seller Unemployment Comp Experience

July 10, 2020 Introduction One tax expense to project when buying the assets of a business is unemployment compensation tax. Especially if the buyer is going to hire the seller’s employees. A potential risk for the buyer is inheriting a

Posted in seller's unemployment experience rating, successor liability Tagged with: ,

Business Asset Buyer May Face $100 Million Payroll Tax Successor Liability Claim

June 30, 2020 Introduction One M&A tax risk in an asset acquisition is seller’s unpaid payroll taxes. The deal The buyer in this case purchased the assets of a financially distressed business for approximately $7.3 million dollars payable at closing

Posted in asset purchase, payroll tax, successor liability Tagged with: ,

Creditor’s Post 363 Successor Liability Claim Thrown Out by Bankruptcy Court

May 27, 2020 Introduction There is more legal risk when buying a distressed business, especially the risk of post-closing claims against the buyer by seller’s creditors, under a successor liability theory. This risk can be substantially minimized if the buyer

Posted in successor liability Tagged with: ,

Buyer in All Cash Stock Deal Fights Mere Continuation Successor Liability Claim

May 15, 2020 Introduction A buyer of the stock of an unrelated company for cash usually does not worry about being directly liable for the target’s liabilities. Perhaps that is not the case when purchasing the stock a distressed business.

Posted in mere continuation exception, stock purchase agreement, successor liability Tagged with: , ,

Business Asset Buyer Assumed Seller Contract by its Post-Closing Conduct

May 2, 2020 Introduction Buyers like to buy the assets of a business (as opposed to the company that runs the business) because it can pick and choose which seller contracts it wants to assume. Generally, a buyer would pick

Posted in asset seller's liabilities, implied assumption of seller contract/liability Tagged with: ,

CA Bankruptcy Court Approves Sale of Business Free of Successor Liability

April 30, 2020 Introduction One risk in buying the assets of a business is the risk that the buyer may be sued by one of the seller’s creditors under a theory of successor liability. This risk is heightened if the

Posted in bankruptcy sale, distressed business acquisitions, Section 363 sale, successor liability Tagged with: , ,

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