COBRA M&A Rules With Multiple Plans

[ERISA-Bubs]

Employer S (Seller) has an HMO and a PPO.  There are COBRA beneficiaries in each.

Employer S will sell substantially all its assets to Employer B (Buyer).  Employer B is a successor employer.  Employer B only has a PPO.  

The parties have agreed Employer S will continue to run the HMO through the end of the year.  Accordingly, Employer S will continue COBRA coverage for COBRA beneficiaries in the HMO plan.  Employer B will continue COBRA coverage for COBRA beneficiaries in the PPO plan under Employer B's plan.

Questions:

Is it appropriate that responsibility for coverage be split up like this?  If not, what are the issues?

When the HMO plan ends at the end of the year, should those COBRA beneficiaries receiving HMO COBRA coverage from Employer S begin receiving PPO COBRA coverage under Employer B's plan?  If not, what is the best way to continue their COBRA coverage?

Thank you for any help!