Asset Deals, Stock Deals, and Successor Liability: What Follows the Business and What Stays Behind

Document type: Article Practice area: Business and Corporate — Mergers and Acquisitions Jurisdiction: United States Last reviewed: 5 September 2026

Every corporate lawyer learns the rule in the first month: buy the stock and you get the liabilities; buy the assets and you do not.

Every corporate lawyer who has practiced for five years knows the rule is a starting point rather than an answer, and that a great deal of the value a transactional lawyer adds lies in knowing exactly which liabilities ignore it.

The exceptions come from three directions. State common law has developed doctrines that impose successor liability where the transaction looks like a merger in substance or where the buyer continues the seller's business without meaningful change. Federal statutes impose obligations directly, on their own terms, without reference to state corporate law. And fraudulent transfer law reaches transactions that leave creditors worse off, regardless of how they were structured.

A buyer who understands all three can structure around a great deal. A buyer who knows only the general rule will be surprised, usually about eighteen months after closing.

The general rule and its four traditional exceptions

The rule. A purchaser of assets does not assume the seller's liabilities.

The four exceptions, recognized in some form in nearly every state:

One — express or implied assumption

The buyer agreed to assume the liability. This is the exception that most often applies, and it is entirely within the parties' control.

Where "implied" assumption bites: a buyer that pays a particular obligation, continues a benefit plan, honors warranties, or holds itself out as responsible for the seller's contracts may be found to have assumed the obligation by conduct, notwithstanding a schedule saying otherwise. The purchase agreement's excluded liabilities schedule is only as good as the buyer's post-closing behavior.

Two — de facto merger

Where the transaction is a merger in everything but form. The factors, which vary by state, typically include:

Continuity of ownership — the seller's owners become owners of the buyer, usually through stock consideration.
Continuity of enterprise — same management, employees, physical location, assets, and operations.
Prompt dissolution of the seller.
Assumption by the buyer of the liabilities ordinarily necessary for uninterrupted continuation of the business.

Continuity of ownership is the crucial factor in most states. An all-cash asset purchase from an unrelated seller rarely triggers de facto merger, because the seller's owners do not become owners of the buyer. A stock-for-assets deal where the seller then dissolves and distributes buyer shares to its holders is the paradigm case.

Three — mere continuation

Where the buyer is essentially the same entity in a new wrapper. The traditional test emphasizes common identity of officers, directors, and stockholders, and the existence of only one corporation after the transaction.

The distinction from de facto merger is one of emphasis: de facto merger looks at whether the transaction was a merger in substance; mere continuation looks at whether the buyer is the seller in substance. In practice courts often run them together.

Where this catches people: the management buyout structured as an asset sale, the transaction between commonly controlled entities, and the "phoenix" transaction where a failing business sells its assets to a newly formed entity owned by the same people.

Four — fraudulent transaction

Where the transaction was entered to escape liabilities. This overlaps with fraudulent transfer law and is discussed below.

The two expansionist doctrines

Some states have added exceptions that go well beyond the traditional four, principally in product liability cases.

The product line exception

Adopted in California and a minority of other states. Where a buyer acquires substantially all of the manufacturing assets of a seller and continues to produce the same product line, the buyer assumes strict liability for defects in units the seller manufactured.

The rationale: the acquisition destroyed the plaintiff's remedy against the original manufacturer; the buyer has the ability to spread the risk through pricing and insurance; and the buyer enjoys the goodwill of the product line.

The scope is contested. Courts applying it have asked whether the buyer actually continued the same line, whether the seller's dissolution left the plaintiff without a remedy, and whether the buyer acquired the goodwill and trade name.

Continuity of enterprise

Adopted in Michigan and a handful of other states. A broader version of mere continuation that does not require continuity of ownership. The factors are operational: retention of employees, same management, same physical facilities, same products, same name, and assumption of the liabilities necessary for uninterrupted operations.

Why this matters. In a continuity-of-enterprise state, an all-cash asset purchase from an unrelated seller — the structure that reliably avoids de facto merger — may still produce successor liability if the buyer runs the business the same way with the same people.

The practical instruction: determine the applicable state's doctrine before choosing a structure, and remember that the applicable state may be where the plaintiff sues, not where the deal was signed. A buyer acquiring a manufacturer whose products are sold nationally faces the law of every state where a product might cause injury.

Federal regimes that ignore the structure

State common law is only half the analysis. Several federal statutes impose obligations on successors on their own terms, and structuring around state doctrines does nothing about them.

CERCLA

The Comprehensive Environmental Response, Compensation, and Liability Act imposes liability on, among others, the current owner or operator of a facility and any person who at the time of disposal owned or operated it. Section 107 is strict, joint and several, and retroactive.

Successor liability under CERCLA follows federal common law, which courts have generally drawn from traditional state doctrines but applied with a federal gloss favoring the statute's remedial purpose. The traditional exceptions apply, and some courts have applied the broader continuity-of-enterprise approach.

United States v. Bestfoods, 524 U.S. 51 (1998) is the essential case on the related question of parent liability, and its framework matters for successors too. The Court held that a parent corporation is not liable for a subsidiary's CERCLA obligations merely by virtue of ownership — the corporate veil must be pierced under ordinary principles — but that a parent may be directly liable as an operator if it managed, directed, or conducted operations specifically related to pollution: "operator" liability turns on the parent's own actions with respect to the facility, not on its status as owner.

The practical consequences for a buyer:

Current ownership alone creates liability. An asset buyer that acquires contaminated real property becomes a current owner and is liable, without any successor analysis at all. This is the most commonly overlooked point in the entire area.
The bona fide prospective purchaser defense requires satisfying a specific set of conditions: all appropriate inquiry before acquisition (a Phase I environmental site assessment meeting the applicable standard), no affiliation with a liable party, appropriate care with respect to the contamination, cooperation with response actions, and compliance with land use restrictions. These are continuing obligations, not a one-time filing, and buyers lose the defense by failing to maintain them.
Contribution under § 113 allows a liable party to seek allocation from others, which is a remedy but not a defense.
Indemnities do not bind the government. A buyer indemnified by the seller is still liable to EPA; the indemnity is only as good as the seller's solvency.

Multiemployer pension withdrawal liability

Where the seller contributes to a multiemployer (union) pension plan, ERISA § 4201 imposes withdrawal liability on an employer that withdraws from an underfunded plan — and the amounts can dwarf the purchase price.

In a stock deal, the obligation stays with the entity and passes to the buyer automatically.

In an asset deal, the seller's cessation of covered operations is a withdrawal, triggering liability — unless the transaction satisfies the § 4204 sale-of-assets exception, which requires:

The buyer has an obligation to contribute for substantially the same number of contribution base units as the seller.
The buyer posts a bond or escrow for five plan years, generally equal to the greater of the seller's average annual contributions over the preceding three years or its contributions for the last plan year.
The contract provides that if the buyer withdraws within five plan years, the seller is secondarily liable.

Successor liability applies even without § 4204. Courts have imposed withdrawal liability on asset purchasers under a federal successorship analysis where the buyer had notice of the liability and there was substantial continuity of the business. Notice is easy to establish once diligence occurs, which creates the uncomfortable dynamic that discovering the problem can be what makes you liable for it.

The diligence step that matters: request a withdrawal liability estimate from the plan under ERISA § 4221 and the related disclosure provisions. Plans must provide estimates on request. Do it early; the number is frequently a deal-changer.

The WARN Act

The Worker Adjustment and Retraining Notification Act requires 60 days' notice of a plant closing or mass layoff by employers of 100 or more employees.

The Act addresses sales directly. In a sale of part or all of a business, the seller is responsible for notice of any triggering event up to and including the date of sale, and the buyer is responsible thereafter. Employees of the seller at the time of sale are deemed employees of the buyer immediately after.

The trap: a buyer that acquires a business and lays off a substantial portion of the workforce shortly after closing may trigger WARN even though the buyer never employed those people for a full day. And the "sale of business" provision means the buyer cannot argue it is a new employer starting fresh.

Several states have their own versions — New York, New Jersey, California, and others — with lower thresholds, longer notice periods, and in some cases severance obligations. State mini-WARN compliance is a separate workstream.

Labor law successorship

Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973) held that a successor employer that acquires a business with knowledge of a pending unfair labor practice proceeding may be ordered to remedy the predecessor's violation, including reinstatement and backpay.

Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987) set out the substantial continuity analysis for the successor's bargaining obligation: whether the business is essentially the same, considering the business operations, plant, workforce, jobs and working conditions, supervisors, machinery, and product or service. Where a majority of the successor's workforce consists of the predecessor's employees, the successor must bargain with the incumbent union.

What a successor is and is not bound by:

Bound to bargain with the incumbent union where the continuity and majority conditions are met.
Generally not bound by the predecessor's collective bargaining agreement — a successor may set initial terms unilaterally, unless it is a "perfectly clear" successor that has made it evident it will retain all employees on existing terms.
May be liable for the predecessor's unfair labor practices where it had notice, under Golden State.

The structuring implication. A buyer that wants to avoid the bargaining obligation must genuinely not hire a majority of the predecessor's workforce — and hiring decisions made to avoid the union are themselves unfair labor practices. This is a narrow and hazardous path, and most buyers are better served by planning for the bargaining obligation than by trying to escape it.

Employment discrimination and wage claims

Federal courts have applied a multi-factor successorship analysis to Title VII, the ADEA, the FLSA, and FMLA claims, typically asking whether the successor had notice of the claim, whether the predecessor can provide relief, and whether there is substantial continuity of operations and workforce.

The FLSA line is particularly active, because wage-and-hour claims are frequently discovered only after closing and the predecessor is often judgment-proof by then.

Tax

Stock deals: the entity's tax liabilities travel with it, full stop.

Asset deals: federal income tax liabilities generally do not transfer, but:

Employment tax obligations may follow where the buyer is a successor employer.
State sales and use tax successor liability statutes are common and severe — many states impose liability on an asset purchaser for the seller's unpaid sales tax unless a clearance certificate is obtained.
Bulk sales notice requirements survive in several states specifically for tax purposes even where the general bulk sales article has been repealed.
Unclaimed property obligations are frequently overlooked and are not discharged by the structure.

The practical step: obtain tax clearance certificates in every state where the seller has nexus, and withhold from the purchase price until they issue. This takes weeks to months and should start at signing.

Fraudulent transfer

Independent of successor liability doctrine, a creditor of the seller may attack the transaction itself.

Under the Uniform Voidable Transactions Act (adopted in most states, replacing the Uniform Fraudulent Transfer Act), a transfer is voidable if made:

With actual intent to hinder, delay, or defraud a creditor; or
Constructively — without receiving reasonably equivalent value, where the debtor was insolvent, became insolvent, was left with unreasonably small assets, or intended to incur debts beyond its ability to pay.

The badges of fraud courts examine for actual intent include: whether the transfer was to an insider; whether the debtor retained possession or control; whether it was concealed; whether the debtor had been sued or threatened with suit; whether it was substantially all of the debtor's assets; whether the debtor absconded or removed assets; whether the value received was reasonably equivalent; and whether the debtor was insolvent or became so.

Where this bites in ordinary deals:

A distressed seller. Buying assets from a company in financial difficulty at a price the creditors think is low is the classic setting.
Insider transactions. A sale to an entity owned by the seller's principals.
Sale of substantially all assets followed by distribution of the proceeds to owners rather than creditors.
Deals structured to leave liabilities in a shell. A transaction that moves the operating business to NewCo and leaves the tort claims in an empty entity is exactly what the statute addresses.

The buyer's protection: pay reasonably equivalent value, document how the price was determined, obtain a solvency certificate from the seller, consider a third-party solvency opinion in a leveraged or distressed transaction, and — where the risk is real — use a bankruptcy sale instead.

Note the reach-back. The UVTA generally permits actions within four years of the transfer, or one year after discovery for actual-intent claims. Bankruptcy law's own avoidance provisions add another route with a two-year reach-back, extended to the state-law period through the trustee's ability to stand in a creditor's shoes.

What a 363 sale actually clears

Section 363(f) of the Bankruptcy Code permits a trustee or debtor in possession to sell property free and clear of any interest in the property, if one of five conditions is met — applicable non-bankruptcy law permits the sale free and clear, the interest holder consents, the price exceeds the aggregate value of all liens, the interest is in bona fide dispute, or the holder could be compelled to accept a money satisfaction.

Why buyers pay a premium for a 363 order. It is the strongest liability protection available in any acquisition structure, and it is entered by a court after notice to creditors.

What it reliably clears: liens, security interests, and claims that constitute "interests in property" — which courts have generally read broadly to include successor liability claims arising from the debtor's pre-petition conduct, where the claimants received notice and an opportunity to object.

What may survive it:

Future claims by unknown claimants — the person injured by a product after the sale, who could not have received notice. Courts have divided, and the due process concern is real. Some sales address this with a claims-estimation and channeling structure.
Certain environmental obligations, particularly ongoing regulatory obligations as distinct from monetary claims. A buyer of contaminated property becomes a current owner under CERCLA regardless of the sale order.
Some employment and labor obligations, depending on the circuit. Courts have split on whether a 363 order can extinguish successorship bargaining obligations and WARN liability.
Police and regulatory obligations generally.

Drafting the order matters enormously. The sale order should recite, specifically, that the sale is free and clear of successor liability claims of every described category, that the buyer is not a successor for any purpose, and that the court retains jurisdiction to enforce. Buyers should insist on the broadest findings the court will make and should support them with a record — notice to known claimants, publication notice, and a demonstrated arm's-length price.

Executory contracts are handled separately under § 365: the debtor may assume and assign a contract notwithstanding an anti-assignment provision, upon curing defaults and providing adequate assurance of future performance. This solves the consent problem that plagues out-of-court asset deals — one of the underrated advantages of a bankruptcy sale.

Bulk sales and notice statutes

Article 6 of the UCC — bulk sales — has been repealed in most states, but its residue persists in three forms:

Tax bulk sales notice. Many states require an asset buyer to notify the tax authority a specified number of days before closing and to withhold from the purchase price until a clearance certificate issues. Failure creates direct successor liability for the seller's unpaid taxes, often without limit.

Liquor and regulated licenses. Transfers of alcohol, cannabis, gaming, healthcare, and similar licenses have their own notice and approval regimes, and successor obligations attach to the license.

Environmental transfer statutes. New Jersey's ISRA and Connecticut's Transfer Act are the best known: they condition the transfer of certain industrial properties on remediation or an approved remediation plan, and non-compliance can void the transaction or impose direct liability.

These are checklist items, not judgment calls, and missing one is an avoidable and expensive mistake.

What structuring actually accomplishes

It is worth being precise about which risks structure addresses and which it does not.

Structure helps a great deal with:

Contract liabilities the buyer does not assume.
General unsecured trade debt.
Litigation claims arising from pre-closing conduct, in most states, in an arm's-length all-cash asset purchase from an unrelated seller.
Tax liabilities of the entity, other than the state successor regimes.

Structure helps somewhat with:

Product liability, depending on the state — and not at all in product line or continuity-of-enterprise jurisdictions.
Employment claims, depending on workforce continuity and notice.
Multiemployer withdrawal liability, if § 4204 is satisfied.

Structure helps very little with:

CERCLA current-owner liability, which attaches on acquisition of the property.
WARN, which applies to the buyer's own post-closing decisions.
Labor law bargaining obligations where the workforce carries over.
State tax successor statutes without a clearance certificate.
Fraudulent transfer, which attacks the transaction rather than the structure.

The honest summary: structure is the first line of defense and it is genuinely valuable, but a buyer that relies on it alone is exposed on the regimes that matter most in practice. The complete answer combines structure with diligence, specific indemnities, escrows, insurance, and — where the exposure justifies it — a bankruptcy sale.

A worked structuring problem

Kilbride Composites, a manufacturer of fiberglass panels, is for sale. It has been in business since 1974, operates two plants, and is marginally profitable. Thornapple Materials wants to buy it.

What diligence finds:

The Delford plant sits on land with documented trichloroethylene contamination in soil and groundwater from a degreasing operation that ran until 1991. A remediation plan was approved by the state in 2003 and is ongoing; estimated remaining cost, $4.2 million.
Product liability. Eleven pending suits alleging that panels manufactured between 1998 and 2006 released respirable fibers. Kilbride's insurer is defending under a reservation of rights. Reserves total $2.8 million; plaintiff demands total $19 million.
A multiemployer pension plan covering 140 employees at the Delford plant. Estimated withdrawal liability: $11.6 million.
State sales tax. Kilbride has not collected use tax on out-of-state installation services in four states. Estimated exposure with penalties and interest: $1.9 million.
Kilbride's balance sheet shows $31 million in assets and $28 million in liabilities. The purchase price is $34 million.

Thornapple's counsel, Beatrice Adeyemi-Ferrars, works through the structure.

Stock deal?

Everything comes with it: the environmental obligation, the eleven suits, the pension, and the tax exposure. The only protections are indemnities from Kilbride's owners, backed by an escrow. Total identified exposure exceeds $19 million against a $34 million price.

Rejected, though it would have been simplest and would have preserved the contracts and permits.

Asset deal — what does it actually solve?

The eleven product liability suits. In most states, an arm's-length all-cash asset purchase from an unrelated seller does not create successor liability for pre-closing product claims. But Kilbride sold nationally, and plaintiffs sue where they are injured. Panels were installed in California and Michigan, and both apply expansionist doctrines. Thornapple intends to continue the panel line under the Kilbride name with the same plants and employees, which is the fact pattern the product line and continuity-of-enterprise doctrines were built for.

Partly solved at best.

The Delford contamination. Not solved at all. If Thornapple acquires the Delford real property, it becomes a current owner under CERCLA § 107, full stop. The successor analysis is irrelevant.

The pension. Kilbride's cessation of covered operations is a withdrawal. Either Kilbride bears $11.6 million — which it cannot — or the transaction satisfies the § 4204 exception, which requires Thornapple to contribute at substantially the same level, post a five-year bond, and accept Kilbride's secondary liability. And even with § 4204, a federal successorship claim remains available given Thornapple's notice and the operational continuity.

Not solved.

The sales tax. State successor statutes apply to asset purchasers. Solved only by clearance certificates.

What Beatrice actually recommends

A hybrid structure with four components.

One — leave the Delford real property behind. Kilbride retains ownership of the Delford land and leases it to Thornapple under a long-term lease. Thornapple becomes an operator but not an owner, and the lease allocates the remediation obligation to Kilbride with a $5 million escrow funded from the purchase price and a covenant that Kilbride will complete the approved plan. Thornapple obtains a pollution legal liability policy with a fifteen-year term covering unknown conditions and cost overruns.

Why this works better than it looks. Thornapple avoids current-owner liability for the known contamination while still operating the plant. It takes operator exposure, which is real, but its own operations do not involve chlorinated solvents. The policy covers what the escrow does not.

Two — accept the pension and price it. Thornapple satisfies § 4204: it agrees to contribute at substantially the same level, posts the required bond, and Kilbride remains secondarily liable for five plan years. The purchase price is reduced by $3.2 million to reflect the ongoing obligation and the bond cost. Attempting to avoid this was the alternative Beatrice examined and rejected, because avoiding it would require not hiring the Delford workforce, which would trigger WARN, destroy the plant's operating capability, and produce a labor law problem of its own.

Three — the product liability line. Thornapple takes the asset structure, excludes the eleven pending suits and any claim arising from pre-closing manufacture, and:

Requires Kilbride to maintain its occurrence-based products liability coverage and to purchase a five-year tail on the claims-made layers.
Takes a $6 million indemnity escrow, released over five years.
Changes the product line materially — reformulating the binder and re-branding the line within eighteen months — which weakens the product line exception's premise that the buyer acquired and continued the same product.
Obtains its own products liability coverage with a retroactive date that does not pick up the seller's exposure.

Beatrice is candid with her client: in California and Michigan this reduces but does not eliminate the risk. The escrow and the insurance are the real protection.

Four — the tax. Bulk sales notices filed in all four states plus the two home states; $2.4 million withheld from the purchase price until clearance certificates issue; a dollar-one uncapped indemnity for any assessment.

The outcome

Purchase price adjusted from $34 million to $30.8 million. Escrows totaling $13.4 million across environmental, product, and tax. A pollution policy at $340,000 for fifteen years. A § 4204 bond at $1.9 million.

Eighteen months later, two of the eleven product suits settle within the insurance layers, one plaintiff in California adds Thornapple as a successor defendant, and Thornapple's motion to dismiss on successor liability is denied — but the claim is fully covered by the escrow and the seller's tail policy. The tax clearances issue with assessments totaling $1.4 million, paid from the withheld amount. The remediation proceeds on schedule.

Beatrice's assessment: the structure did about sixty percent of the work. The escrows, the insurance, and the real property lease did the rest. A buyer who had relied on "we bought assets, not liabilities" would have acquired all four problems and discovered them one at a time.

The seller's side of the question

Successor liability is usually discussed from the buyer's perspective, and sellers under-attend to it at their cost.

A seller in an asset deal keeps everything it does not transfer — which means the seller entity, after distributing the proceeds, is a shell holding all the retained liabilities. That is the intended result, and it creates three problems.

One — the seller cannot dissolve cleanly. Most state dissolution statutes require a corporation to make provision for known claims and to publish notice for unknown ones, with a claims period that can run three or more years. A seller that distributes the entire purchase price to its owners and then dissolves has exposed the owners to claw-back under the dissolution statute, the fraudulent transfer statute, or both.

Two — the indemnity obligations outlive the entity. A seller that has agreed to indemnify the buyer for eighteen months must remain in existence and solvent for that period, and for however long the special indemnities run. Where the sellers are individuals, they will be pursued directly.

Three — insurance must be maintained. Occurrence-based policies continue to respond to pre-closing occurrences, but only if the policies exist and the premiums are paid. Claims-made policies require a tail, purchased before the policy lapses. The most common seller mistake is allowing coverage to lapse after closing, converting an insured liability into a personal one.

What a seller should do:

Retain enough of the proceeds, in the entity or in a reserve, to fund known and reasonably anticipated liabilities.
Purchase tail coverage on every claims-made policy — D&O, EPL, products, professional, cyber — before closing.
Keep occurrence policies in the files; they are assets, and thirty-year-old policies have funded eight-figure defense costs.
Follow the dissolution statute's notice procedure precisely; it converts an indefinite exposure into a bounded one.
Appoint a sellers' representative with an expense fund and authority to act after the entity winds down.
Consider a run-off insurance product where the tail exposure is long.

And a word on the "phoenix" transaction. A seller whose principals form a new entity to buy the assets and continue the business is the paradigm mere-continuation case, and it is also the paradigm fraudulent transfer case. It sometimes has legitimate business purposes. It requires an arm's-length price supported by a valuation, full notice to creditors, and — where the amounts justify it — a bankruptcy sale, because the protection an order provides is not available any other way.

What to remember

The general rule is a starting point. Four traditional exceptions, two expansionist doctrines in some states, and a set of federal regimes that ignore structure entirely.

The applicable state law may be the plaintiff's, not yours. A nationally distributed product means the product line and continuity-of-enterprise doctrines are live wherever the product went.

CERCLA current-owner liability attaches on acquisition of the property. No structure avoids it; only not acquiring the property does.

Multiemployer withdrawal liability is frequently the largest number in the deal, and it must be quantified early by requesting an estimate from the plan.

WARN applies to your own post-closing decisions, and the sale-of-business provision means you cannot claim to be a new employer.

Labor successorship depends on who you hire, and hiring to avoid a union is itself unlawful.

State tax successor statutes are checklist items solved by clearance certificates and withholding — and missed constantly.

Fraudulent transfer attacks the deal, not the structure. Pay a defensible price, document it, and obtain solvency evidence.

A 363 order is the strongest protection available, and it is not absolute — future unknown claims, ongoing environmental obligations, and some labor obligations may survive.

And the practical instruction that covers all of it: identify every material liability in diligence, ask separately for each one whether the structure addresses it, and for the ones it does not, use escrows, insurance, tail coverage, clearance certificates, bonds, and — where the exposure justifies it — a different transaction altogether.

A structural comparison

Liability	Stock deal	Asset deal	363 sale
Trade payables	Assumed	Excluded, generally effective	Cleared
Contract obligations	Assumed	Only if assigned; consents needed	Assumed/assigned under § 365 with cure
Pre-closing litigation	Assumed	Excluded, subject to state doctrines	Generally cleared with notice
Product liability (pre-closing)	Assumed	Excluded, except product line and continuity states	Generally cleared; future unknown claims uncertain
CERCLA — property owner	Assumed	Attaches on acquisition of the property	Attaches on acquisition of the property
CERCLA — monetary claims	Assumed	Federal successorship analysis applies	Generally cleared
Multiemployer withdrawal	Assumed	Withdrawal triggered unless § 4204; successorship risk remains	Complex; plan claims may be discharged but successorship theories persist
WARN	Applies	Applies to buyer's own decisions	Applies to buyer's own decisions
Labor bargaining obligation	Continues	Depends on workforce continuity	Depends on workforce continuity
Predecessor's ULPs	Assumed	Possible with notice under Golden State	Uncertain
Employment discrimination	Assumed	Successorship analysis: notice plus continuity	Generally cleared with notice
State sales/use tax	Assumed	Successor statutes apply absent clearance	Generally cleared
Employment tax	Assumed	Successor employer rules may apply	Generally cleared
Unclaimed property	Assumed	Frequently follows	Generally cleared
Fraudulent transfer exposure	Low	Real, if price or solvency is questionable	Eliminated by court approval

Reading the table. The rows where all three columns say the same thing — CERCLA property ownership, WARN, labor successorship — are the ones structure cannot solve, and they are the ones buyers most often assume structure solves.

Frequently asked questions

We are buying assets. Do we get the seller's contracts? Only those assigned to you, and only where assignment is permitted. Contracts with anti-assignment clauses require consent, and a change-of-control clause in a stock deal can be triggered too. Identify them in diligence; the customer who will not consent is a deal risk, not a legal footnote.

Does an excluded liabilities schedule protect us? As between you and the seller, yes. As against a third-party claimant asserting successor liability, it is evidence but not a defense. And a buyer whose post-closing conduct suggests assumption may be found to have assumed by implication regardless of the schedule.

We are acquiring a manufacturer. Which state's successor liability law applies? Potentially every state where the product caused injury. Analyze the product line and continuity-of-enterprise doctrines in the states where the products are distributed, not only the state of incorporation or the state of the deal.

How do we find out the withdrawal liability number? Request an estimate from the plan. Plans must respond to requests under the ERISA disclosure provisions. Do it in the first two weeks of diligence; the number frequently changes the deal.

Can we avoid the union by not hiring the workforce? Technically the bargaining obligation depends on whether a majority of your workforce comes from the predecessor — but refusing to hire because of union affiliation is an unfair labor practice, and the remedy can include a bargaining order and backpay. Plan for the obligation rather than trying to evade it.

Does a 363 sale clear everything? It clears more than any other structure and it does not clear everything. Future unknown tort claims, ongoing environmental regulatory obligations, current-owner CERCLA liability, and — in some circuits — certain labor obligations may survive. Negotiate the broadest findings the court will make and support them with a record.

If we buy the real property, are we liable for the contamination? Yes, as a current owner under CERCLA, unless you qualify and remain qualified as a bona fide prospective purchaser — which requires all appropriate inquiry before acquisition and continuing compliance with appropriate-care and cooperation obligations. Not acquiring the property, or acquiring it with an insurance-and-escrow package, are the practical alternatives.

Is a seller indemnity enough? It is worth exactly what the seller is worth when the claim arises. Escrows, insurance, tail coverage, guarantees from solvent parents, and bonds are what make an indemnity real.

What is the single most overlooked item? State tax clearance certificates. They are mechanical, they take weeks, and skipping them creates direct successor liability that no structure prevents.