A significant portion of Maryland personal injury lawsuits are filed against corporations. One issue that frequently comes up when discussing the potential liability of a corporate defendant is how the sale of business assets impacts a business’ exposure to liability. Successor liability is the legal term used to describe this concept.
When discussing successor liability, it is helpful to understand a few terms. The purchasing corporation is referred to as the successor company, and the selling corporation is referred to as the predecessor company. Under Maryland law, when a company buys the assets of another company, the successor company is not liable for the predecessor’s liabilities. However, there are four exceptions to this general rule:
- If there is an express assumption of liability in the articles of transfer;