More often than not, bankruptcy filings lead to the sale of a business as a going concern. Such sales are frequently concluded prior to confirmation of a plan of reorganization by resort to Section 363 of the Bankruptcy Code.
Successor Liability Claims in Bankruptcy
More often than not, bankruptcy filings lead to the sale of a business as a going concern. Such sales are frequently concluded prior to confirmation of a plan of reorganization by resort to Section 363 of the Bankruptcy Code. Section 363 authorizes the sale of a bankrupt company "free and clear of any interest in such property." 11 U.S.C. '363(f). Product liability claims, though, can occur suddenly and seemingly at random long after the sale of the assets to the successor. The successful purchaser may have thought that the "free and clear" sale order was a legal barrier to successor liability. The prudent product liability practitioner knows otherwise.
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