Friday, January 11, 2019
Undisclosed and Unknown
Here is an Alert on Successor Liability to My Clients and Professional Contacts: M&A was not a factor in the recent Fox Bindery financial disaster brought on by the Dept of Labor (Cautionary Tale: Fox Group is Defrauded by Temp Agency) but the case illustrates what you’ve heard me call “undisclosed, unknown” Seller liabilities. In theory, the staffing agency mess which rolled into Fox Bindery could have become Buyer’s problem EVEN IF Buyer followed standard legal advice to avoid buying seller’s stock and performed ordinary due diligence. It’s a cautionary reminder for Buyers to identify Successor Liability risks as early as possible and navigate protectionary measures into your M&A Offer even prior to formal legal documentation and accountant’s due diligence. I am closing this Alert by stating that the Fox Bindery case is used here solely for educational purposes, and my comments should not infer anything negative about this company.