Sections 22, 41
SUCCESSORSHIP, Transfer of assets, Cash Assets, Leasehold Interest
CITE AS: Midway Stop-n-Shop, Inc., v MESC, Cass Circuit Court, No. 86-12638AA (March 29, 1990).
Appeal pending: No
Employer: Midway Stop-N-Shop, Inc.
Docket No. L86-08390-RM1 (Bypassed Board of Review)
CIRCUIT COURT HOLDING: Where successor took over an ongoing business, including the real estate via lease, and continued in business with essentially all the assets except for a large amount of cash, the cash was properly disregarded in determining the percentage of assets transferred.
FACTS: In June 1985, employer acquired an ongoing business (convenience store). Acquisition of $47,000 in inventory, equipment and goodwill was not in dispute. Issue was whether or not $59,000 in leasehold improvements on the realty and $80,000 in cash assets not transferred by the predecessor should be considered in determining whether or not more than 75 percent of assets were transferred. The referee found that out of a total of $126,000 in assets available for transfer, $106,000 was transferred, or 84 percent. He included the leasehold improvements in the transfer. He found that $20,000 of the $80,000 was available for transfer but should not be considered as a transferable asset.
DECISION: Employer is a successor under Sections 22 and 41, having acquired more than 75 percent of the predecessor's assets.
RATIONALE: Transfer of a leasehold is the transfer of an asset for purposes of successorship because the transferee acquires an ownership interest in the property. With regard to cash assets, considering cash reserves (as opposed to receivables) as a transferable asset can lead to an absurd result of paying cash for cash. It could also lead to manipulation of the transaction for the purpose of, for example, reducing the amount of assets transferred as compared with the total assets.