Opinion ID: 2518474
Heading Depth: 1
Heading Rank: 8

Heading: Cessation of ordinary business operation

Text: The third factor is whether the seller corporation continued to exist after the sale of assets. [19] Some courts have determined that when a seller of assets continues to exist after the sale of assets to the successor corporation, there is no de facto merger. [20] U.S. Labs urges this court to adopt this view. We refuse to do so; rather, we view this as a factor to be equally weighed to determine whether a de facto merger occurred in a given case. Here, the evidence demonstrates that this factor was not met in the instant case because Buena Nevada continued to exist after the asset purchase. After the asset purchase, Brannen changed the name of the seller corporation and maintained it as a corporate entity pending resolution of an outstanding lawsuit. In Tucker v. Paxson Machine Co ., the Eighth Circuit determined that a similar set of facts precluded a finding of de facto merger. [21] In fact, at least two courts have concluded that there was no de facto merger when the seller corporation continued to exist but did not engage in any business operations. [22] In Schumacher v. Richards Shear Co ., the court rejected an assertion of successor liability when the predecessor continued to exist as a distinct, albeit meager, entity. [23] In Gavette v. The Warner & Swasey Co ., the court concluded that de facto merger did not lie because the seller corporation continued to exist at least transcendentally for one year. [24] Likewise, in the instant case, the seller, Buena Nevada, continued to exist after it sold all of its assets to U.S. Labs. Therefore, it was amenable to suit during that period of time. As a result, we conclude that the facts simply do not support Village's contention that this factor is met.