When a conversion becomes effective, property, liabilities, and pending cases move to the surviving entity, and shareholders’ rights and liabilities are limited by the conversion terms and related law.
(MBCA 9.55) (a) When a conversion under sections 21-2,143 to 21-2,149 becomes effective: (1) The title to all real and personal property, both tangible and intangible, of the converting entity remains in the surviving entity without reversion or impairment; (2) The liabilities of the converting entity remain the liabilities of the surviving entity; (3) An action or proceeding pending against the converting entity continues against the surviving entity as if the conversion had not occurred; (4) In the case of a surviving entity that is a filing entity, its articles of incorporation or public organic document and its private organic document become effective; (5) In the case of a surviving entity that is a nonfiling entity, its private organic document becomes effective; (6) The shares or interests of the converting entity are reclassified into shares, interests, other securities, obligations, rights to acquire shares, interests, or other securities, or into cash or other property in accordance with the plan of conversion, and the shareholders or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any appraisal rights they may have under the organic law of the converting entity; and (7) The surviving entity is deemed to: (i) Be incorporated or organized under and subject to the organic law of the converting entity for all purposes; (ii) Be the same corporation or unincorporated entity without interruption as the converting entity; and (iii) Have been incorporated or otherwise organized on the date that the converting entity was originally incorporated or organized. (b) When a conversion of a domestic business corporation to a foreign other entity becomes effective, the surviving entity is deemed to agree that it will promptly pay the amount, if any, to which such shareholders are entitled under sections 21-2,171 to 21-2,183. (c) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the surviving entity shall be personally liable only for those debts, obligations, or liabilities of the surviving entity that arise after the effective time of the articles of entity conversion. (d) The owner liability of an interest holder in an unincorporated entity that converts to a domestic business corporation shall be as follows: (1) The conversion does not discharge any owner liability under the organic law of the unincorporated entity to the extent any such owner liability arose before the effective time of the articles of entity conversion; (2) The interest holder shall not have owner liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion; (3) The provisions of the organic law of the unincorporated entity shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (1) of this subsection as if the conversion had not occurred; and (4) The interest holder shall have whatever rights of contribution from other interest holders that are provided by the organic law of the unincorporated entity with respect to any owner liability preserved by subdivision (1) of this subsection as if the conversion had not occurred. History: Laws 2014, LB749, § 148.