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Caveat Emptor: You May Be Purchasing More than Assets

09/05/2018

Congratulations. Your company recently completed purchasing the assets of another company and now you are looking forward to an increased bottom line from efficiencies of scale. Then, weeks, months or even years after the deal closes, your company is named as a defendant in an employment suit. The suit alleges the former company – whose assets your company purchased – discriminated or retaliated against its employee. Because that former company no longer exists, the plaintiff is now seeking to hold your company liable.

But wait, you argue. Your company sim-ply purchased the other company’s assets –not its liabilities. Moreover, you never had any notice about this claim during the due diligence process. In fact, you took specific steps to make sure your company was not li-able for any debts or obligations of the prior company. How can your company be held liable for the prior company’s conduct under these facts?

Unfortunately, as some companies have discovered, they can be held liable under these very facts. Here’s why, and how to avoid this outcome.

Read the full article in the Fall/Winter 2018 edition of USLAW Magazine here.