§ 149.003.Limitations on Successor Asbestos-Related Liabilities

The operative limit, stated in two sentences.

Subsection (a): the cumulative successor asbestos-related liabilities of a corporation are limited to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The corporation does not have any responsibility for liabilities in excess of that.

"Cumulative" is the essential word. The cap is not per claim or per claimant — it is a single ceiling across every asbestos claim the successor ever faces, and each payment draws it down.

The principle is that a successor should not inherit more than it acquired. A corporation that bought a business worth $10 million in 1960 should not face $500 million in liabilities that came with it and could not have been known.

Whether that is right is a real question, and worth stating plainly. The cap protects the acquirer’s shareholders, and its cost falls on claimants whose claims exceed it — people injured by a product the transferor made, who recover a fraction or nothing.

The Legislature chose the successor, on the reasoning that without the cap corporations would be exposed to unlimited liability from transactions completed before the risk was understood.

Subsection (b) handles chained mergers. Where the transferor had itself assumed asbestos liabilities in an earlier merger, the total assets of that prior transferor, valued at the earlier merger, are substituted for the cap.

So the ceiling is set by the original source of the liability, and a chain of transactions cannot raise it.