AI-assisted research summary: When a conversion takes effect, the converted entity carries over the converting entity’s property, rights, obligations, and most legal attributes, with some limits on dissolution/receivership claims and liability rules.
29-2406 - Effect of conversion 29-2406 . Effect of conversion A. When a conversion becomes effective: 1. The converted entity is both of the following: (a) Organized under and subject to the governing statute of the converted entity. (b) The same entity without interruption as the converting entity. 2. All property, including rights, privileges, immunities and powers, of the converting entity remains vested in the converted entity without assignment, reversion or impairment. 3. All obligations of the converting entity continue as obligations of the converted entity except that only a governor of or interest holder in the converted entity may bring or maintain a claim for dissolution or receivership against the converted entity brought pursuant to any of the following: (a) Section 10-1430, subsection B. (b) Section 10-1815. (c) Section 10-11430, subsection B. (d) Section 10-11431, subsection C. (e) Section 12-1241. (f) Section 29-345. 4. Except as provided by law other than this chapter or the plan of conversion, all of the rights, privileges, immunities, powers and purposes of the converting entity remain in the converted entity. 5. The name of the converted entity may be substituted for the name of the converting entity in any pending action or proceeding except that only a governor of or interest holder in the converted entity may bring or maintain a claim for dissolution or receivership against the converted entity brought pursuant to any of the following: (a) Section 10-1430, subsection B. (b) Section 10-1815. (c) Section 10-11430, subsection B. (d) Section 10-11431, subsection C. (e) Section 12-1241. (f) Section 29-345. 6. If the converted entity is a domestic filing entity, its public organizational document is effective and is binding on its interest holders. 7. If the converted entity is a domestic limited liability partnership, its statement of qualification is effective simultaneously. 8. If the converted entity is to be a qualified foreign entity, the documents it filed to become a qualified foreign entity are effective simultaneously. 9. The private organizational documents of the converted entity that are to be in a record, if any, approved as part of the plan of conversion are effective and are binding. 10. The interests in the converting entity are converted and the interest holders of the converting entity are entitled only to the rights provided to them under the plan of conversion and to any appraisal rights they have under section 29-2109 and the converting entity's governing statute. B. Except as provided in the plan of conversion or in the governing statute or organizational documents of the converting entity, the conversion does not give rise to any rights that an interest holder, governor or third party would otherwise have on a dissolution, liquidation or winding up of the converting entity. C. When a conversion becomes effective, a person that did not have interest holder liability with respect to the converting entity and that becomes subject to interest holder liability with respect to the domestic converted entity as a result of a conversion has interest holder liability only to the extent provided by the governing statute or organizational documents of the domestic converted entity, and then only for those obligations that arise after the conversion becomes effective. D. When a conversion becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic converting entity with respect to which the person had interest holder liability is as follows: 1. The conversion does not discharge any interest holder liability under the governing statute or organizational documents of a domestic converting entity to the extent the interest holder liability arose before the conversion became effective. 2. The person does not have interest holder liability under the governing statute or organizational documents of the domestic converting entity for any obligation that arises after the conversion becomes effective. 3. The governing statute and organizational documents of the domestic converting entity continue to apply to the release, collection or discharge of any interest holder liability preserved under paragraph 1 of this subsection as if the conversion had not occurred. 4. The person has the same rights of contribution from any other person as are provided by the governing statute or organizational documents of the domestic converting entity with respect to any interest holder liability preserved under paragraph 1 of this subsection as if the conversion had not occurred. E. When a conversion becomes effective, a foreign entity that is the converted entity: 1. May be served with process in this state for the collection and enforcement of any of its obligations that arise before the conversion becomes effective, including obligations arising out of the exercise of appraisal rights. 2. If it is not a qualified foreign entity, appoints the appropriate filing authority as its agent for service of process for collecting or enforcing those obligations. F. When the conversion becomes effective, the authority, registration or other qualification granted by the appropriate filing authority to transact business or conduct affairs in this state of a converting entity that is a qualified foreign entity is automatically revoked or cancelled. G. A conversion does not require the entity to wind up its affairs and does not constitute or cause the dissolution of the entity.