SUCCESSOR LIABILITY

Successor liability is a mere continuation of its predecessor liability and the successor is held liable for obligations of the predecessor if any of the following factors are present:

• Common officers, directors and stockholders
• Same management
• Same personnel
• Same assets and location
• Same phone number
• Same inventory
• Same “key” personnel
• Disposition of accounts receivable
• One newly formed entity exists after the sale
• Continuation of seller’s business practices and policies
• Sufficiency of consideration paid to the seller
• Asset transfer to insiders, including relatives
• Detrimental Reliance as an implied acceptance of liability by another entity
• Commingling of assets among entities
• Arm’s length asset transfer
• Merger
• An entity purchaser of Corporate Stock
• Decision makers remain the same
• A buyer of assets failing to exercise “good faith”
• Any asset transfer or purchase outside the “normal course of business”

Arm’s length asset transfer means “within the reach of buyer and seller.” There must be no confidentiality connection between any buyer and any seller.

Under the Uniform Fraudulent Transfer Act if a transferee fails to act in “good faith” then the transferee becomes liable. If any debtor entity assets are transferred or purchased, third party collection should commence immediately.

Should credit department personnel determine that any factor is present to pursue successor liability, then the claim should be placed with Williams & Williams, Inc. immediately.