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Book Chapter
Successor Liability Theory and Insolvency Law
Laura Coordes
Re-Examining Insolvency Law and Theory: Perspectives for the 21st Century
E. Ghio et al. eds., Edward Elgar 2023
 
Open Access  |  Library Access

Abstract:

The successor liability doctrine allows a court to hold a purchaser liable for the seller’s liabilities or tortious conduct. Courts have developed various theories for holding purchasers liable; however, successor liability theories are in tension with many of the policies behind insolvency law. This chapter asks whether it is time to rethink the role of successor liability theories in bankruptcy and insolvency law. Drawing upon examples from recent US chapter 11 practice, it contends that bankruptcy law’s broad preemption of successor liability can stifle the availability of a remedy for parties that have been harmed by corporations and their products. The chapter considers recommendations put forward by scholars to rectify this imbalance before arguing that the question of how to better reconcile the goals of bankruptcy law with those of successor liability is an important piece of a larger project of rethinking bankruptcy’s place in the broader legal system.
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