The general rule is that an asset purchaser does not assume the seller’s liabilities. Four traditional exceptions, plus statutory ones, make the rule less reliable than buyers assume.
Express or implied assumption. Assumption may be implied from conduct, including the buyer’s continuation of claims handling or its representations to creditors.
De facto merger. Continuity of ownership, management, personnel and operations; assumption of the liabilities necessary for uninterrupted business; and prompt dissolution of the seller. Continuity of ownership — the seller’s owners becoming owners of the buyer — is the element courts weight most heavily, and stock consideration is therefore a risk factor.
Mere continuation. Essentially the same entity under a new name, with common identity of officers, directors and shareholders.
Fraudulent transfer. A sale designed to escape creditors, analysed under fraudulent transfer law.
Statutory and product line exceptions. Environmental, employment and tax statutes impose successor liability directly; some states recognise a product line exception in products liability.
Mitigation. Purchase for fair value with a documented valuation; avoid stock consideration where possible; require the seller to remain in existence and maintain insurance; obtain indemnities backed by escrow or insurance; comply with bulk sale and creditor notice provisions where they survive; and give notice to known creditors.