Lawsuits for personal injuries, medical monitoring, and remediaton claims resulting from historic environmental contamination often involve successor liability claims, where the corporation that caused the pollution no longer exists, but there appears to be a successor corporation operating the same or a similar business. Below is a general summary of the legal rules pertaining to successor liability claims, with the caveat that the common law in your jurisdiction may vary.
Under traditional common law, when a corporation purchases another corporation’s assets, the assets are typically bought free and clear of any unrecorded liens, and the buyer is generally not liable for the seller’s debts or other liabilities. However, under the successor liability doctrine, a buyer of another corporation’s assets may be held liable to answer for the seller’s debts or other liabilities where:
- the buyer expressly or impliedly agrees to assume them;
- the transaction amounts to a de facto merger or consolidation of the buyer and the seller;
- the buyer is a mere continuance of the seller corporation; or
- the transaction is fraudulent to escape such obligations.
To learn more, please visit Bill Wagner's recent blog post on Commonground.