Corporate Building

So You Think You Know The Law Spring 2016

1. True or False: When buying just the assets of a business (as opposed to buying capital stock) the buyer does not have to buy any liabilities. True. When a buyer buys capital stock it is buying the entire business and has successor liability. When it buys just assets, it can avoid all liabilities, including successor liability. 2. True or False: A buyer will never have successor liability when it buys assets of a seller if it does not explicitly assume any liabilities. False. There are many ways a buyer can become liable for a seller’s obligations even in an asset purchase and even when the buyer does not explicitly agree to assume liabilities. 3. True or False: When a buyer buys assets of a business, a buyer can acquire successor liability for all of a seller’s employment obligations by agreeing to give the seller’s employees who the buyer hires the same vacation time they had with the seller. True. A buyer can inadvertently step into successor liability for all the seller’s employment obligations by assuming any of them.

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