Successor liability in Illinois: when can creditors and tort victims sue the buyer of a business for the debts and torts of the seller?

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Successor liability in Illinois: when can creditors and tort victims sue the buyer of a business for the debts and torts of the seller?

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Successor liability is an exception to the general rule that, when one corporate or other juridical person sells assets to another entity, those assets are transferred free and clear of all but valid liens and security interests. When successor liability is imposed, a creditor or plaintiff with a claim against the seller may assert that claim against and collect payment from the purchaser.

Historically, successor liability was a flexible doctrine, designed to eliminate harsh results from strict application of corporate law. Over time, however, as successor liability doctrines evolved, they became ossified in many jurisdictions. Corporate lawyers and those who structure transactions learned how to avoid successor liability doctrines. (1) This article ...

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