Successor liability arises through express assumption, de facto merger, mere continuation of the predecessor, or fraudulent transfer to escape liability. Asset purchases generally do not transfer liability absent an exception.
Product line successor liability applies in some states.
Alternative Names:
Successor Corporation, Successor in Interest
Why it Matters?
The product line exception is the most consequential for manufacturers, since a minority of states impose liability on a successor that continued producing the same product line regardless of how the transaction was structured. That defeats the asset purchase structuring that otherwise limits exposure. Determining whether the forum recognizes the exception is a threshold question in any claim against an acquirer.
Frequently Confused with
Frequently asked questions
Does an asset purchase transfer liability?
What is the product line exception?
