The short answer
In a stock sale, the buyer acquires the company with all its liabilities. In an asset sale, the buyer picks which assets and liabilities to take, though some liabilities can still follow the assets.
Where it fits in your case
When buying or selling a business, and when a creditor pursues the buyer.
What to expect
Successor liability can apply to asset buyers through express assumption, de facto merger, mere continuation, or fraud.
Contracts often require the other party’s consent to assign.
Tax notice. Illinois requires notice to the Department of Revenue in many business asset sales, or the buyer can become liable for the seller’s unpaid taxes.
What we need from you
The purchase agreement, schedules of assumed liabilities, and key customer, vendor, and lease contracts.
Common misconceptions
“An asset sale leaves every liability behind.” Exceptions apply.
“Contracts transfer automatically.” Many need consent.