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(Solution) - Albatrans Inc entered into an agreement to purchase all the

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Albatrans, Inc. entered into an agreement to purchase all the assets of Chase-Leavitt, a shipping company. In connection with the acquisition, Chase-Leavitt, which held a federal customs brokerage license allowing it to perform customs services for clients, agreed to provide its customs brokerage services exclusively to Albatrans until Albatrans (or one of its subsidiaries) acquired such a license. Chase- Leavitt was to operate as a distinct profit center within Albatrans during this interim period and use the assets it had sold to Albatrans for that purpose. Chase-Leavitt was also required to ?accept the advice and direction? of managers hired by Albatrans in this arrangement.
The acquisition agreement also required Chase- Leavitt?s sole shareholder, Alison Leavitt, to continue in Chase-Leavitt?s employ until Albatrans obtained its license and gave Albatrans the option of continuing her employment for an additional five years on specified terms. Alison Leavitt agreed to indemnify Albatrans for any breach by Chase-Leavitt of its obligations under the agreement and for any liabilities Chase-Leavitt incurred before the agreement?s execution. Her obligation was secured with a mortgage on her personal residence. In exchange, Chase Leavitt was to be paid a declining percentage of profits generated by the ?profit center? over the ensuing five years, with $250,000 paid in advance immediately upon the close of the transaction.
Before Albatrans and Chase-Leavitt entered into negotiations, Chase-Leavitt had incurred a debt to Cargo Partner AG for $240,000. Cargo Partner sued Albatrans, demanding that Albatrans pay Chase-Leavitt?s debt on the theory that there had been a de facto merger of Albatrans and Chase-Leavitt. Can Cargo Partner recover from Albatrans? What public policies are implicated by the different approaches to successor liability? [Cargo Partner AG v. Albatrans Inc., 352 F.3d 41 (2d Cir. 2003).]


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