There Is No Such Thing as *The* Successor Liability Test in Minnesota. There Are at Least Four, They Run Simultaneously, and the Deal That Beats One Walks Into Another.

Every asset purchase agreement in Minnesota contains a paragraph saying the buyer assumes the specifically listed liabilities and nothing else. Every buyer’s lawyer points at Minn. Stat. § 302A.661, subd. 4 and says the statute backs that paragraph up.

It does. Read the whole sentence, though. The protection is bounded by a clause most people skim: the transferee is liable “only to the extent provided in the contract or agreement between the transferee and the transferor or to the extent provided by this chapter or other statutes of this state.”

“Other statutes of this state” is not a footnote. It is a doorway. Minnesota has at least three other bodies of law that attach consequences to the same transaction, on entirely different criteria, at the same time. A deal engineered to satisfy one of them can fail another — and in one common configuration, the very fact that makes the deal safe under the corporate statute is the fact that makes it unsafe under the fraudulent transfer act.

The four regimes, and why they do not speak to each other

Each of these bodies of law asks a different question about the same closing. None of them is a subset of another. All of them can be litigated over one transaction.

Three of the four cannot be disclaimed by agreement. The fourth can only be satisfied by agreeing to more, not less.

Test one: the corporate statute is a shield with a hole cut in it on purpose

Minn. Stat. § 302A.661, subd. 4 is a strong provision, and Minnesota courts have taken it seriously. Here it is in full:

The transferee is liable for the debts, obligations, and liabilities of the transferor only to the extent provided in the contract or agreement between the transferee and the transferor or to the extent provided by this chapter or other statutes of this state. A disposition of all or substantially all of a corporation’s property and assets under this section is not considered to be a merger or a de facto merger pursuant to this chapter or otherwise. The transferee shall not be liable solely because it is deemed to be a continuation of the transferor.

Two of the three sentences do real work against classic common-law successor theories. De facto merger is named and rejected. Mere continuation is named and rejected — with a precise qualifier: the transferee is not liable solely because it is deemed a continuation.

The first sentence, however, contains the concession. The Legislature did not say the transferee is liable only as the contract provides. It said only as the contract provides or as this chapter or other statutes of this state provide. For the deeper doctrinal history of subdivision 4 and what remains of the common-law exceptions, see You Bought the Assets, Not the Company.

The practical consequence is the point of this article. Section 302A.661, subd. 4 does not resolve the successor liability question. It routes it. It tells you the answer is in the rest of the statute books.

Test two: the construction statute counts the things you bought the business for

Minn. Stat. § 181.723 governs misclassification of construction employees, and subdivision 2 limits its reach: “This section only applies to persons providing or performing building construction or improvement services.”

Within that reach, subdivision 7(e) does something § 302A.661, subd. 4 never contemplated:

An order issued by the commissioner to a person for engaging in any of the prohibited activities in this subdivision is in effect against any successor person. A person is a successor person if the person shares three or more of the following with the person to whom the order was issued:

(1) has one or more of the same owners, members, principals, officers, or managers; (2) performs similar work within the state of Minnesota; (3) has one or more of the same telephone or fax numbers; (4) has one or more of the same email addresses or websites; (5) employs or engages substantially the same individuals to provide or perform building construction or improvement services; (6) utilizes substantially the same vehicles, facilities, or equipment; or (7) lists or advertises substantially the same project experience and portfolio of work.

Read that list as a deal lawyer instead of as a regulator. Items (2) through (7) are, almost item for item, the things a buyer pays a premium to acquire in a construction asset purchase. You buy the crews. You buy the trucks and the yard. You keep the phone number so the general contractors can reach you. You keep the website and the project portfolio, because that portfolio is the prequalification history that gets you on bid lists.

A textbook, well-executed construction asset purchase hits five or six of the seven. The threshold is three.

Be precise about what the subdivision does and does not do. It provides that a commissioner’s order carries over to the successor person. It is not a general assumption of the seller’s debts, and it operates inside the enforcement scheme of § 181.723 — a scheme that authorizes compensatory damages to misclassified individuals and penalties of up to $10,000 per individual and per violation under subdivision 7(g), with individual liability for owners, partners, principals, members, officers, and agents who acted knowingly or repeatedly under subdivision 7(d).

It is also not something the purchase agreement can switch off. Nothing in subdivision 7(e) turns on what the parties agreed. It turns on what the buyer’s business looks like after closing. For background on the underlying misclassification framework, see Minnesota’s Construction Misclassification Statute.

Test three: the UVTA does not care what you called the transaction

The Uniform Voidable Transactions Act, Minn. Stat. §§ 513.41 to 513.51, reaches transfers, and “transfer” is defined at § 513.41(16) as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset.” An asset sale is a transfer. Whether it is a voidable transfer has nothing to do with the deal structure.

Under § 513.44(a)(2), a transfer is voidable if the debtor made it “without receiving a reasonably equivalent value in exchange for the transfer or obligation” and was engaged in a business for which the remaining assets were unreasonably small, or believed it would incur debts beyond its ability to pay. Under § 513.45(a), a transfer is voidable as to an existing creditor if made without reasonably equivalent value while the debtor was insolvent or was rendered insolvent by it.

And the remedy runs at the buyer. Section 513.47(a)(1) allows “avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim,” and § 513.48(b)(1)(i) permits judgment against “the first transferee of the asset or the person for whose benefit the transfer was made.”

Now watch the two statutes interact. The buyer’s instinct under § 302A.661, subd. 4 is to assume as few liabilities as possible — that is what the statute rewards. But consideration in an asset deal is routinely a mix of cash and assumed liabilities. Strip the assumed liabilities down and you have also stripped down the value flowing to the seller. Do that with a seller whose creditors are already circling, and you have moved the deal from the corporate statute’s safe harbor into § 513.45(a)’s target zone.

The escape hatch closes the same way. Section 513.48(a) protects “a person that took in good faith and for a reasonably equivalent value given the debtor” against an actual-intent claim under § 513.44(a)(1). The defense requires the same thing the claim says was missing. A price low enough to be attractive is a price low enough to be an element.

See Minnesota’s Fraudulent Transfer Act for the full framework, including the badges of intent at § 513.44(b) and the burden rules at § 513.48(g).

Test four: the federal overlay, which requires the buyer to assume more

If the seller contributes to a multiemployer pension plan, federal law is running its own analysis, and it is indifferent to Minnesota’s corporate code.

Under 29 U.S.C. § 1381(a), “[i]f an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability.”

29 U.S.C. § 1384(a)(1) then supplies the asset-sale rule, and its architecture is the mirror image of the state statute. A withdrawal does not occur “solely because, as a result of a bona fide, arm’s-length sale of assets to an unrelated party . . . the seller ceases covered operations or ceases to have an obligation to contribute for such operations” — but only if three conditions are met:

• the purchaser “has an obligation to contribute to the plan with respect to the operations for substantially the same number of contribution base units for which the seller had an obligation to contribute”;
• the purchaser provides the plan, “for a period of 5 plan years commencing with the first plan year beginning after the sale of assets,” a corporate surety bond or escrow in the amount specified in § 1384(a)(1)(B); and
• “the contract for sale provides that, if the purchaser withdraws in a complete withdrawal, or a partial withdrawal with respect to operations, during such first 5 plan years, the seller is secondarily liable for any withdrawal liability it would have had to the plan with respect to the operations (but for this section) if the liability of the purchaser with respect to the plan is not paid.”

Here is the collision, and it is not hypothetical. The state-law instinct is to assume nothing. The federal statute’s only path to a clean sale is for the buyer to assume the contribution obligation, post a five-year bond, and put a five-year secondary-liability clause in the contract for the seller’s benefit. Decline all of that and the sale does not fit § 1384 — which means the seller’s withdrawal liability is triggered at closing. A seller hit with withdrawal liability immediately after selling substantially all of its assets is a seller whose creditors have an obvious § 513.45(a) argument, and the buyer is the first transferee.

Other federal regimes — labor law and environmental law among them — carry their own successor doctrines with their own tests. Those are outside the scope of this article and should be analyzed on their own terms rather than assumed to track either the Minnesota statute or the MPPAA rule.

The entity gap: chapter 322C appears to contain no counterpart

Section 302A.661 sits in chapter 302A, the Minnesota Business Corporation Act. Most closely held Minnesota businesses sold today are limited liability companies governed by chapter 322C, the Minnesota Revised Uniform Limited Liability Company Act.

A full-text search of chapter 322C returns no provision analogous to § 302A.661, subd. 4. Chapter 322C addresses disposition of substantially all of a company’s property only as a consent question — § 322C.0407, subd. 3(4)(i) and subd. 4(16)(i) require the consent of all members to “sell, lease, exchange, or otherwise dispose of all, or substantially all, of the company’s property, with or without the good will, outside the ordinary course of the company’s activities.” Neither provision says anything about the transferee’s liability.

The chapter’s one provision titled “Transferee liability,” § 322C.0502, subd. 8, is about something else entirely — the transfer of a transferable interest in the company, not a sale of the company’s assets: “When a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member’s obligations under sections 322C.0403 and 322C.0406, subdivision 3, known to the transferee when the transferee becomes a member.”

We state this as an open question, not as settled law. The absence of a counterpart provision does not itself establish that a different rule applies to LLC asset sales, and we have not located Minnesota appellate authority squarely deciding whether § 302A.661, subd. 4’s abrogation of de facto merger and mere continuation extends to a transaction in which the seller is a chapter 322C limited liability company. If your deal depends on the answer, it is worth briefing before closing rather than after. Read the chapter yourself; it takes an afternoon and it is the entity your seller actually is.

What should I actually do?

If you are buying Minnesota business assets:

1. Diligence the seller’s balance sheet as hard as its P&L. The UVTA question is not “is this business a good buy.” It is “will the seller be able to pay its creditors after this closing.” Those are different investigations, and only one of them is on the standard diligence checklist.
2. Document reasonably equivalent value contemporaneously. A third-party valuation, a competitive process, or a documented arm’s-length negotiation is cheap now and is the § 513.48(a) defense later.
3. In construction, run the seven factors in § 181.723, subd. 7(e) before you sign, not after. Ask whether the Department of Labor and Industry has issued any order to the seller or to any person sharing its owners, members, principals, officers, or managers. If one exists, the operational overlap you are paying for is the overlap the statute counts.
4. Ask the multiemployer plan question early. If the seller contributes to one, § 1384’s three conditions have to be engineered into the deal — bond, contribution obligation, secondary-liability clause — or priced as a triggered withdrawal. There is no version where ignoring it is cheaper.
5. Do not treat the “no assumed liabilities” recital as risk transfer. It allocates risk between buyer and seller. It does not bind the seller’s creditors, the commissioner, or a pension fund, none of whom signed it.

If you are selling:

1. Understand that an indemnity from a company that no longer has assets is a piece of paper. If your buyer’s protection is your indemnity, price the escrow accordingly.
2. Do not sell into insolvency and assume the transaction is over at closing. Under § 513.48(b)(1), a creditor’s judgment can run against the first transferee for the value of the asset transferred — which will bring you back into the case as a witness at best.

The observation

The intuitive picture of successor liability is a single rule with exceptions: buyers are not liable, unless. Minnesota’s actual structure is not that. It is four regulators of the same event, each with its own statute, its own trigger, and its own remedy, and § 302A.661, subd. 4 is the only one of them the parties can negotiate with.

That produces a specific and underappreciated failure mode. Optimizing hard against the one test you can negotiate — assume nothing, pay less, keep the operating assets — moves you toward the three you cannot. Keep the crews and the phone number and you are counting toward three of seven. Push the price down and you are arguing about reasonably equivalent value. Refuse to assume the plan contribution and you may have triggered the seller’s withdrawal liability, which supplies the insolvency that the fraudulent transfer claim needed.

The deals that go wrong in this area are rarely sloppy. They are usually well-lawyered against one statute.

Madgett Law, LLC advises Minnesota buyers and sellers on asset purchase structure, successor liability exposure, and creditor claims arising out of business sales. If you are structuring a deal, diligencing one, or defending a claim after one closed, send us a message or call 612-470-6529.

Sources: Minn. Stat. § 302A.661, subd. 4 (transferee liability; de facto merger; continuation); § 181.723, subd. 2 (limited application), subd. 7(d) (individual liability), subd. 7(e) (successor person; three of seven factors), subd. 7(g) (damages and penalties); §§ 513.41(16) (definition of “transfer”), 513.44(a)–(b) (voidable as to present or future creditor; badges of intent), 513.45(a) (voidable as to present creditor), 513.47(a)–(b) (remedies of creditor), 513.48(a), (b), (g) (defenses; liability of transferee; burden of proof); § 322C.0407, subd. 3(4)(i) and subd. 4(16)(i) (member consent to disposition of substantially all property); § 322C.0502, subd. 8 (transferee liability as to transferable interests) — all from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes. Chapter 302A, chapter 181, chapter 513, and chapter 322C checked against the Revisor’s Table 2 (Statutes Affected by Session Laws) for the 2025 Regular and 1st Special Session and the 2026 Regular Session; none of the provisions cited above was amended in either session. Federal: 29 U.S.C. § 1381(a) (withdrawal liability established) and § 1384(a)(1) (sale of assets), Legal Information Institute, Cornell Law School.

This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. Whether any of these regimes applies to a particular transaction depends on the entity type, the industry, the seller’s financial condition, and the terms of the deal. The chapter 322C question discussed above is expressly identified as unresolved and should not be relied on as settled. No outcome is promised or implied.