Assumption of Liabilities

A buyer purchases certain assets and assumes certain liabilities of a seller under an asset purchase agreement. However, after the transaction closes, the buyer files for bankruptcy under Chapter 11 of the Bankruptcy Code and eventually rejects the asset purchase agreement. From a deal lawyer's perspective, the issue is: What impact does the bankruptcy filing and the contract rejection have on the carefully drafted, thoroughly negotiated asset purchase agreement?

7 minute read March 28, 2011 at 03:52 PM
By
Patrick J. Leddy, Charles M. Oellermann And Joseph M. Witalec
Assumption of Liabilities

The transaction is straightforward: A buyer purchases certain assets and assumes certain liabilities of a seller under an asset purchase agreement. However, after the transaction closes, the buyer files for bankruptcy under Chapter 11 of the Bankruptcy Code and eventually rejects the asset purchase agreement.

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