Under some circumstances, sellers of stock of a corporation may be liable as transferees for corporate obligations arising before or in connection with the closing.

In Dillon Trust Co. v. United States, 132 AFTR 2d 2023-6368 (Ct. Fed’l. Cl.), the Court of Federal Claims concluded, under New York fraudulent conveyance law, that the sellers of the stock of two corporations were liable for tax obligations of the corporations attributable to sales of assets for notes prior to the closing of the stock sale. The sellers were also liable for the corporations’ tax obligations attributable to sales of the remaining corporate assets immediately after the closing, where the sellers had reason to be concerned that the buyer would not cause the corporations to pay those taxes.

Facts in ‘Dillon Trust’