Buyer Beware: 363 May Not Absolve Successor Liability

Law360, New York (April 20, 2012, 3:19 PM EDT) -- It has long been understood by buyers of assets of distressed companies that once a sale is authorized pursuant to Section 363 of the Bankruptcy Code, the buyer is absolved of any liabilities which may have encumbered the assets of the previous owner, including causes of actions against them. However, a recent decision from the influential United States District Court for the Southern District of New York saddles buyers with the burden of unknown potential future claims.

In Morgan Olson LLC v. Frederico (In re Grumman...
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