In US Ecology, Inc. v. Allstate Power Vac, Inc., C.A. No. 2017-0437-AGB (June 18, 2018), the parent of the seller sued both the buyer and the buyer’s parent for reimbursement of “non-covered payments” after closing. The purchase agreement at issue did not include such an obligation.  In addition, the Chancery Court reasoned that even if there was a legal obligation to reimburse such expenses, the seller could recover against the target only given that the new parent company was an entity separate from the target.

BOTTOM LINE: If you want the parent to be obligated for the subsidiaries’ obligations, include it as a provision in the applicable agreement!