Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 21
SUCCESSOR LIABILITY ON PURCHASE
OF ASSETS FROM ANOTHER BUSINESS
Section
§ 21.01 Introduction
§ 21.02 Statutory Mergers
§ 21.03 Purchase of the Assets of a Corporation
§ 21.04 Assumption of Liabilities
§ 21.05 De Facto Merger
§ 21.06 Mere Continuation
§ 21.07 Fraud
§ 21.08 Special Considerations for the Application of the General Rule
§ 21.09 Successor Liability in the Context of Environmental Laws
§ 21.10 Successor Liability outside Corporate Law
§ 21.11 Bulk Transfers Act
§ 21.12 Fraudulent Transfers
§ 21.13 Products Liability
§ 21.01 Introduction
The liability of one corporation for the debts and obligations of
another depends on the nature of their relationship. Each corporation is
normally responsible for its own debts; however, parent corporations can
be held liable for the debts of their subsidiaries.1 Corporations can also
be held liable for the debts of corporations with which they have merged
with or corporations whose assets they have purchased. This Chapter
addresses the liability of corporations who succeed to the control of other
corporations through merger or asset purchase.
Holding successor corporations liable for the debts and obligations of
their predecessors serves two basic policy functions. First, it discourages
corporate wrongdoing by preventing the evasion of liabilities through
either a mere change of corporate identity or structure. Second, it
provides compensation for injured creditors of defunct corporations.
These goals, however, are in tension with promoting the free
marketability of capital assets.
§ 21.02 Statutory Mergers
In Minnesota the merger of two or more corporations into one
surviving corporation is authorized by statute.2 The directors of the
corporations may enter into an agreement governing the merger, and it
can be carried out in any manner to which they agree. The merger must
ultimately be approved by the shareholders of the surviving corporation,
unless certain conditions apply.3
The surviving corporation may be an entirely new corporation created
for the purpose of effecting the merger, or one of the original constituent
companies.4
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis