If your organization is in good fiscal shape in these tough times, top brass may be looking to snap up the assets of failed companies at bargain prices. Remind
Recent case: When Newcor, which had a location in Michigan, filed for bankruptcy, it sold some of its assets, including the Michigan facility. Michigan’s labor laws provide that an entity that buys more than 75% of a business is the successor employer and “inherits” any employee liabilities.
When that issue arose in court, the buyer was able to show that it had bought far less than 75% of Newcor—but only after protracted litigation. Had it reviewed the purchase in detail first, it might have avoided litigation. (Midwest Rubber v. Michigan, No. 278223, Court of Appeals of Michigan, 2008)
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