Successor Liability

The ability of a vendor’s creditor to seek recovery against the purchaser of assets for debts or liabilities not assumed by the purchaser as part of the transaction. Provincial legislation has established successor liability in relation to certain environmental, labour and employment matters.

Outside of the statutory exceptions, a purchaser of assets in an asset acquisition does not assume the liabilities of a vendor. No court in Canada has ever held a purchaser responsible for liabilities of the vendor on the basis of a common law doctrine of successor liability (see Cominco Ltd. v. Westinghouse Canada Ltd., 1981 CarswellBC 413 (B.C. S.C.), reversed on other grounds without discussing the successor liability point 1983 CarswellBC 124 (B.C. C.A.). For a decision affirming that this doctrine does not apply in Canada, see Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. v. Liebeg & Keown LLP, 2016 CarswellAlta 1425 (Alta. Q.B.)).