Product Liabilities in an Assets-Only Sale

Background: A mid-size technology parts manufacturer with global sales over $20,000,000 was planning to sell a division using an “assets only” approach. Problem: Management was understandably nervous about ongoing liabilities for sold products already in the marketplace. While the company could relatively easily continue to carry a sold division’s name on ongoing insurance when operations of the parent company are continuing, the challenge was to put a program in place prior to the sale that would protect the officers and boards once the company had folded. Solution: N.P. James Insurance Agency recommended securing continuing insurance risk protection for the officers and board. A team including an underwriter was put together to work with the company’s legal representatives to structure a program that would cover past products once the company was sold. Results: The technology manufacturer moved ahead with the sale after securing a specifically designed and well-defined program to cover the identified risks.