This article is Part X of the Musings on Contracts series by Glenn D. West, which explores the unique contract law issues the author has been contemplating, some focused on the specifics of M&A practice, and some just random.
Introduction—The Muddy Wellies I Abandoned in the London Office
In 2009, I was shooting at the Downton Estate (a year before they started filming the “Downton Abbey” series that made Highclere Castle and its estate famous worldwide). At the end of a great day, I changed out of my shooting clothes and put my muddy Wellies in a plastic bag, which I brought back to London. I was dropped off at the London office because I needed to pick up some work stuff before heading back to my hotel to pack for my trip home to the U.S. As I thought about how I would clean those muddy Wellies and pack them with my clothes, I decided that, as much as I loved my Wellingtons, it was simply too much trouble. So, I left them at the office with instructions that anyone who wanted my muddy, but otherwise perfectly good, Wellies could have them. And a few years ago, I was told by the London partner who claimed them that they were still in use. Wellies are apparently very durable (although I am confident that the London partner has not put the same wear and tear on them that a farmer would).[1]
The Company Responsible for Creating My Wellingtons Is No More
Despite the durability of Wellington boots, the company that created them, Hunter Boots Limited, was not as resilient. Supply chain issues, inflation, and drier weather all contributed to the company’s deteriorating financial condition. But the pandemic may have been the final nail in the coffin. It seems that Wellingtons serve as both a fashion statement and a necessity in muddy conditions at outdoor events (and concertgoers tend to impulse-buy Wellies to attend such events). When the pandemic hit, and all outdoor concerts were canceled (including the famous Glastonbury Festival for both 2020 and 2021), this may have worsened Hunter Boots Limited’s financial situation. Hunter Boots Limited went into administration on June 5, 2023, and sold all its assets to pay off its £112 million of debt. In other words, the iconic, 167-year-old British company that held two Royal Warrants from Queen Elizabeth II no longer exists. However, because you can still purchase Hunter Boots–branded Wellies, you might not have realized that the company itself is no longer in business.
The Assets Sold Through the Administration
Among the assets sold through Hunter Boots Limited’s administration were the assets of its U.S. subsidiary, Hunter Boot USA LLC (“Hunter Boot USA”). Importantly, it was the assets of Hunter Boot USA that were sold by Hunter Boot USA, not the equity of Hunter Boot USA by its owner, Hunter Boots Limited, even though Hunter Boot USA did not itself file a bankruptcy petition under U.S. bankruptcy law.
Hunter Boot USA leased part of the seventeenth floor and the entire nineteenth and twentieth floors of a well-known office building in New York City at 57 West 57th Street. The purchase of Hunter Boot USA’s assets was structured as a typical asset deal, with two separate buyers collectively acquiring substantially all its assets. Neither buyer, however, assumed the 57 West 57th Street lease.
One of the buyers was Marc Fisher LLC, which purchased all of Hunter Boot USA’s footwear inventory, removable fixtures from 57 West 57th Street, and a piece of equipment. The other buyer was Authentic Brands Group LLC, which acquired Hunter Boot USA’s trademarks and domain names, along with certain non-footwear apparel and accessories. Additionally, Authentic Brands had separately acquired all of Hunter Boots Limited’s intellectual property, including the brand, directly from Hunter Boots Limited. Marc Fisher LLC reportedly now manages the operational side of the Hunter footwear category for Authentic Brands in the U.S.
The Asset Buyers Are Alleged to Have Successor Liability for the 57 West 57th Street Lease
Within a few months after Marc Fisher LLC and Authentic Brands acquired its assets, Hunter Boot USA stopped paying rent to the landlord of 57 West 57th Street. The landlord then sued Marc Fisher LLC and Authentic Brands, as “successors” to Hunter Boot USA, for all unpaid rent through the end of the lease term. The trial court dismissed the landlord’s complaint on the simple basis that the buyers had bought assets and did not assume the tenant’s obligations under the lease. But in a recent New York case, Avamer 57 Fee LLC v. Hunter Boot USA LLC,[2] the appellate court overruled the trial court’s dismissal of the landlord’s complaint, holding that the landlord had plead sufficient facts for the case to proceed to trial based on the “mere continuation” theory of successor liability.
The General Rule—No Successor Liability for Buyers of Assets—and Its Exceptions
Buyers purchase assets from a company rather than acquiring the equity of the company, so they can leave unassumed liabilities with the selling company. However, as with most general rules, the law has long recognized several ways in which a selling company’s liabilities can be imposed on the buyer of its assets, even when the buyer has not explicitly assumed those liabilities.
The means by which a buyer of assets can become responsible for the liabilities of the selling company are generally described as being based on any one of four exceptions:
(1) the [buyer] expressly or impliedly assumes the liability of the [selling company], (2) the transaction is a de facto merger or consolidation, (3) the [buyer] is a mere continuation of the [selling company], or (4) the transaction is a fraudulent effort to avoid liabilities of the [selling company].[3]
Given the vagaries of the standards used to impose liabilities under the “mere continuation” and the “de facto merger” exceptions, particularly with respect to tort liabilities, Texas has eliminated those two exceptions by statute.[4] But most states, including New York, continue to recognize all four exceptions. And contrary to popular belief, these exceptions are not limited to imposing successor liability upon a buyer for product liability claims; they can also be used to impose ordinary contractual liabilities of the selling company on the buyer(s) who only purchased assets.
While New York recognizes all four exceptions to the general rule against successor liability for asset buyers, the court found three of them inapplicable in Avamer 57. First, there was no claim by the landlord that the asset purchase agreements included any assumption of Hunter Boot USA’s liabilities under the lease or otherwise by the buyers, which effectively ruled out the express or implied assumption theory of successor liability (exception 1). Likewise, there was no continuity of ownership between the selling company, Hunter Boot USA, and the buyers, Authentic and Fisher. As a result, the landlord apparently conceded that the de facto merger theory (exception 2) was unavailable as a basis to hold the buyers liable under the lease as Hunter Boot USA’s successors.[5] There was also no indication that the consideration paid by the buyers to Hunter Boot USA was less than the fair market value of the assets purchased, nor that the sale had been concealed, nor that there was any other indicator of fraud, so the court did not believe that the fraudulent avoidance theory of successor liability (exception 4) was available.[6] That left the mere continuation theory (exception 3) as a possible exception to the general rule that a purchaser of assets does not have successor liability.
Digging into the “Mere Continuation” Doctrine
When you understand the factors that New York courts consider in applying the mere continuation theory, you may better appreciate why the Texas Business Law Foundation, a nonprofit group formed by large Texas law firms to “help create a favorable business climate in the State of Texas,”[7] pushed for the elimination of the mere continuation theory (as well as the de facto merger theory) as exceptions to the general rule that buyers of assets do not have successor liability.
In Avamer 57, the court noted that in New York,
courts determining whether a [buying entity] is a “mere continuation” of [the selling entity] have considered [a number of factors, including] whether: (1) all or substantially all assets are transferred to the successor corporation; (2) the predecessor corporation has been effectively extinguished following the transaction; (3) the successor has assumed an identical or nearly identical name; (4) the successor has retained one or more of the same corporate officers, directors, and/or employees; and (5) the successor has continued the same business.[8]
Obviously, all of those factors are present in nearly any asset sale of an entire business. Regarding the first factor, the court noted that the landlord had plead that the buyers in fact purchased substantially all of Hunter Boot USA’s assets and even sought to lease from the landlord the same premises Hunter Boot USA had leased. Concerning the second factor, Hunter Boot USA had informed the landlord that they “would ‘imminently dissolve and wind up their affairs’ and that [they] did ‘not have sufficient funds to make any further payments, including rent.’” Regarding the third factor, the buyers had actually “purchased the Hunter Boot brand, goodwill, intellectual property, and the ability to use the Hunter Boot name” (though the main brand was purchased directly from Hunter Boots Limited). As for the fourth factor, the court noted that the buyers had apparently announced that, in connection with the purchase of Hunter Boot USA’s assets, they did not plan any leadership changes, suggesting they would retain at least some key Hunter Boot USA employees (though rehiring employees of the selling company in an acquisition of a business through an asset transaction is common). Finally, regarding the fifth factor, the court indicated that the fact that the buyers continued to use the leased premises at 57 West 57th Street for a few months after the transaction closed, while Hunter Boot USA continued paying rent and while Fisher was trying to negotiate a new lease with the landlord, constituted continued operations of Hunter Boot USA’s business at the same location by the buyers.[9] (Hmm.)
While the Avamer 57 court was only overruling the trial court’s dismissal on the pleadings, and there will now be a full fact-finding trial, it still raises a host of concerns as to the reliability of using an asset sale to avoid the liabilities of a selling entity where the mere continuation theory is an available exception. Presumably, a UK administration does not provide the same protections to a buyer as a U.S. bankruptcy proceeding with a § 363 sale might have.[10]
Concluding Thoughts
If this transaction had been governed by Texas law, the dismissal of the complaint based on the pleadings would likely have been upheld because the mere continuation and de facto merger exceptions to the general rule protecting asset buyers from successor liability have been removed. And even though Delaware apparently recognizes the mere continuation exception, it appears to be much more constrained in its application:
The mere continuation exception requires that “the purchaser of the assets to be a continuation of ‘the same legal entity,’ not just a continuation of the same business in which the seller of the assets engaged.” “The ‘primary elements’ of being the same legal entity have been said to include ‘the common identity of the officers, directors, or stockholders of the predecessor and successor corporations, and the existence of only one corporation at the completion of the transfer.’”[11]
But a recent decision by the federal district court of New Jersey suggests that New Jersey law, like New York’s, does not consider the continuity of ownership or management a necessary requirement for the invocation of the mere continuation exception.[12]
While there are certainly actions the buyers here could have taken to potentially reduce the applicability of the mere continuation theory under New York law, it is hard to see how one could fully eliminate it. However, if successor liability theories can be likened to a muddy field after a rain, you are well advised to carefully consider how to metaphorically “put on your Wellies” before traversing through it.
A version of this article first appeared in Weil’s private-equity-focused newsletter, Sponsor Sync. Glenn D. West, Saturday Morning Musings: On the Need to Metaphorically “Put Your Wellies On” Before Traversing the Muddy Bog That Is Successor Liability in the US, Weil Priv. Equity Sponsor Sync 31 (Q1 2026). ↑
Avamer 57 Fee LLC v. Hunter Boot USA LLC, 241 N.Y.S.3d 181 (N.Y. App. Div. 1st Dep’t 2025). ↑
Gary Matsko, De Facto Merger: The Threat of Unexpected Successor Liability, Bus. L. Today (Mar. 14, 2018) (quoting Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 556, 887 N.E.2d 244, 254 (2008) (quoting Guzman v. MRM/Elgin, 409 Mass. 563, 566, 567 N.E.2d 929, 931 (1991))). ↑
Tex. Bus. Orgs. Code § 10.254(b). Indeed, “only express assumption is grounds for successor liability under Texas law.” In re 1701 Com., LLC, 511 B.R. 812, 824 (Bankr. N.D. Tex. 2014). While fraudulent transfer may invalidate the sale, it is apparently not a separate basis under Texas law for imposing successor liability on the buyer. Id. ↑
I have previously written about the de facto merger doctrine. See Glenn D. West, An Asset Purchase That Wasn’t—Beware the De Facto Merger Doctrine in Distressed M&A, Weil Glob. Priv. Equity Watch (May 4, 2020). But note that the holding of the court I discuss there has been subsequently reversed, although the discussion remains valid. See New Nello Co., LLC v. CompressAir, 168 N.E.3d 238 (Ind. 2021). ↑
There is some confusion as to how the purchase price paid by the buyers for the assets was used. Apparently, rather than Hunter Boot USA retaining the purchase price, it may have been used to repay Hunter Boots Limited’s UK secured creditors in the administration. It is not clear whether the assets of Hunter Boot USA were pledged to secure Hunter Boots Limited’s UK debt, nor how much was actually paid for the limited assets being purchased from Hunter Boot USA. The bulk of the value appears to have been in the brand itself, which was separately purchased directly from Hunter Boots Limited. The court appears to acknowledge that fair value was paid to Hunter Boot USA for its assets, but whether there was a claim that could have been filed to avoid the transfer of the consideration for Hunter Boot USA’s assets to Hunter Boots Limited’s creditors on some fraudulent transfer basis is unclear. Regardless, a fraudulent transfer does not necessarily create successor liability—it typically only creates an opportunity for the transferor’s creditor (here, the landlord) to claw back the transfer. ↑
Alan R. Bromberg, Byron F. Egan, Dan L. Nicewander & Daniel S. Trotti, The Role of the Business Law Section and the Texas Business Law Foundation in the Development of Texas Business Law, 41 Tex. J. Bus. L. 41, 63 (2005). The Texas Business Law Foundation is also responsible for legislation that severely limits the alter ego theory in contract-based cases (Tex. Bus. Orgs. Code § 21.223), the recent establishment of the Texas Business Courts, and several business-friendly revisions to Texas corporate law. ↑
Avamer 57 Fee LLC v. Hunter Boot USA LLC, 241 N.Y.S.3d 181, 185 (N.Y. App. Div. 1st Dep’t 2025). ↑
Id at 185–88. ↑
See 11 U.S.C. § 363. ↑
Cleveland-Cliffs Burns Harbor LLC v. Boomerang Tube, LLC, 2023 WL 5688392, at *16 (Del. Ch. Sept. 5, 2023) (quoting Spring Real Est., LLC v. Echo/RT Holdings, LLC, 2013 WL 6916277, at *5 (Del. Ch. Dec. 31, 2013)). ↑
McLaren v. UPS Store, Inc., 2025 WL 2938269 (D.N.J. Oct. 16, 2025). ↑
