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$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: , ,

Business Asset Buyer Has Long Fight Over Seller Union’s $58 Million Pension Claim

April 3, 2020 Introduction An asset buyer of a business generally can select which seller liabilities the buyer will assume. One significant exception is the risk, when buying assets of a union business, that the seller’s underfunded union pension plan

Posted in federal multiemployer pension plan withdrawal liability, successor liability Tagged with: , , ,

Creative Stock Acquisition Cost $10 million in Tax Penalties & Additions Plus Interest

February 3, 2020 Introduction A stock sale of a business often yields the business owner a greater amount of after tax sales proceeds than a sale of assets. However, most buyers prefer the tax advantages of an asset acquisition. This

Posted in asset vs stock deal, midco transaction, tax penalties and additions, transferee liability for taxes IRC Section 6901, Uniform Fraudulent Transfer Act or Uniform Voidable Transfer Act Tagged with: , ,

Business Buyer Pays Reasonably Equivalent Value Liable to Seller Lessor Under UFTA

Introduction One legal risk of buying a distressed business is having to pay a seller creditor for an unassumed APA liability even when the buyer paid fair market value for the business. The deal The buyer in this case was

Posted in hinder, delay or defraud, insider, reasonably equivalent value, successor liability, Uniform Fraudulent Transfer Act or Uniform Voidable Transfer Act Tagged with: , , , ,

Court Finds No De Facto Merger in Purchase of Bankrupt’s Intangibles-IP

Introduction Buyers of manufacturing businesses must always assess product liability risks. Even when buying the assets of the business as opposed to the stock (or LLC membership interests). The deal Here, the manufacturing company in this case made lathes. It

Posted in asset purchase agreement, de facto merger exception, successor liability Tagged with: , ,

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