South-Western Legal Studies in Business

Successor Corporation Assumes Product Liability Risks if Same Business Continued
Description South Carolina high court held that when a corporation buys another business in bankruptcy, and then continues the same business, product liability actions that date back to the original business will be imposed on the successor corporation.
Topic Business Organization
Key Words Corporation; Successor; Liability
C A S E   S U M M A R Y
Facts Simmons was injured at a construction site when an elevated work platform collapsed. Mark Industries produced and sold the lift in 1990. BPS sold the lift to the end user, which provided it for use on the construction site. Mark went bankrupt in 1991. Terex bought its assets at auction free and clear of all security interests, claims and liens, as approved by the bankruptcy court. Terex continued to produce the lifts that Mark had been making and sold them under the same name. Simmons sued Terex for product liability for defects in the lift. The federal district court asked the South Carolina supreme court if, under South Carolina law, successor liability could apply to Terex
Decision

Answer. A company that purchased the assets of an unrelated company at a bankruptcy sale, approved by the federal bankruptcy court, was liable under a theory of successor liability in product liability suits involving the lift. Such liability could exist because there was an agreement to assume such liability, or, as here. Terex, the successor, was a mere continuation of the manufacturer, Mark. Simmonsí suit may proceed.

Citation Simmons v. Mark Lift Industries., 622 S.E.2d 213 (Sup. Ct., S.C., 2005)

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