Due Diligence & Legal
Successor Liability Risk
The risk that a buyer inherits a target's pre-existing statutory, tax, labour, or environmental liabilities by operation of law, regardless of what the transaction documents say.
Seller Example
Promoter of a Panipat textile dyeing unit proactively resolves an outstanding pollution control board show-cause notice before going to market, removing a successor liability risk flag that would otherwise have caused buyers to demand an uncapped indemnity or a lower purchase price to compensate for inherited statutory exposure.