Court: Wisconsin Court of Appeals
Appeal No.: 2021AP635
Status: Awaiting Opinion/Decision
WMC Involvement: Amicus
This case involves an insurance dispute that could significantly impact the ability of companies to buy and sell subsidiary businesses (including assets and liabilities). This dispute centers on an insurance policy’s “anti-assignment” clause, which states that an assignment of interest does not bind the insurance company without its consent. The issue in this case is whether a generic anti-assignment clause applies to liabilities that an insured business incurred while its insurance policy was in effect but before the business was sold to another company. If an anti-assignment clause applies this broadly, insurance companies would receive a windfall because their coverage would be narrowed while their potential liability remains the same. Simply put, many businesses would be difficult to sell if anti-assignment clause applied this broadly.
WMC filed an amicus brief in the Wisconsin Court of Appeals, urging it to hold that generic anti-assignment clauses do not apply to liabilities that a business incurred before being bought by another company. This position, if adopted, would promote the robust exchange of assets on which our free-market system relies.