TRYING TO AVOID DEBT - SUCCESSOR LIABILITY

It may be a new name, but it's the same business trying to avoid debt.

Jack Williams Tire Co. v. The Tire Pl. of Queens Ltd., NYLJ 1/24/19, Date filed: 2019-01-15, Court: Supreme Court, Queens, Judge: Justice Robert McDonald, Case Number: 711068/2016:

"An action for continuation of successor liability requires a plaintiff to show that the corporation was a mere continuation of its predecessor (see Broadway 26 Waterview, LLC v. Bainton, McCarthy & Siegel, LLC, 94 AD3d 506 [1st Dept. 2012]). “[W]hen a successor firm acquires substantially all of the predecessor’s assets and carries on substantially all of the predecessor’s operations, the successor may be held to have assumed it’s predecessor’s…liabilities” (Aguas Lenders Recovery Group v. Suez, S.A., 585 F3d 696, 702 [2d Cir. 2009] [internal quotation marks and citations omitted]). In determining whether a successor corporation is a mere continuation of a predecessor corporation, five factors are considered: (1) all or substantially all assets are transferred to the successor corporation; (2) only one corporation exists after the transfer; (3) assumption of an identical or nearly identical name; (4) retention of the same corporation officers and/or directors; and (5) continuation of the same business (see Miot v. Miot, 897 NYS2d 670 [Sup Ct, NY Cnty 2009]).

Here, Tire Place of Queens transferred its website, phone number, customer base, and network to Tire Place. Although Ms. Lombardi contends that Tire Place merely assumed the abandoned assets of Tire Place of Queens, a successor corporation has still been found to be a mere continuation of a predecessor corporation without a formal transfer of assets when, as here, only one of the two corporations is benefitting from those (see Miot v. Miot, 897 NYS2d 670 [Sup Ct, NY Cnty 2009]). Only one corporation now exists, and the names are nearly identical. Tire Place is owned by the daughter and former co-owner of Tire Place of Queens and a former employee. Lastly, Tire Place is merely an expansion of Tire Place of Queens’ business, not a different business. As such, the five factors are met, and this Court finds that Tire Place is a mere continuation of Tire Place of Queens."