Successor Liability

Listen to this article

7^th Circuit Court of Appeals

Case Name: Board of Trustees of the Automobile Mechanics’ Local No. 701 Union and Industry Pension Fund v. Full Circle Group, Inc. et al

Case No.: 15-2497

Officials: BAUER, POSNER, and WILLIAMS, Circuit Judges.

Focus: Successor Liability

Court prematurely makes ruling on successor liability

“As noted in Tsareff v. ManWeb Services, Inc., supra, 794 F.3d at 845, “substantial continuity in the operation of the business before and after the sale” of its assets is a requirement for successor liability. For had the business not changed there would be no reason for its financial structure to change—no reason therefore to allow the successor company to obtain a windfall by acquiring assets free of liabilities, leaving its predecessor with liabilities but no assets. Enough evidence was presented of continuity of business between HMC and FCG to preclude summary judgment in favor of FCG on grounds of discontinuity, and enough no‐ tice that FCG (which is to say Mark Hannah) had notice of HMC’s pension fund liability to preclude summary judgment on the ground that FCG lacked notice of possible successor liability.”

Affirmed in part

Reversed and remanded in part

Full Text

Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.