When Successor Liability And Bankruptcy Principles Collide
Law360, New York (July 1, 2016, 11:52 AM EDT) -- Company A manufactures a product that is used by millions of consumers, and it is facing thousands of personal injury claims seeking millions of dollars based on an alleged defect in that product. The financial burden of this litigation, coupled with inadequate liability insurance, pushes Company A into bankruptcy. Even though it has developed a new product design that likely eliminates the defect, Company A is unable to reorganize and seeks to sell its business through the bankruptcy. Company B is interested in acquiring the business but has been cautioned by its lawyers about the risk of possible successor liability for Company A's liabilities, including possible "future claims" arising from the use of Company A's old product after the bankruptcy. Can Company B safely make the acquisition?...
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