When a conversion takes effect, the converted entity continues the business, property, liabilities, and pending proceedings of the converting entity, and certain owners or members keep limited rights.
Sec. 10.106. GENERAL EFFECT OF CONVERSION. When a conversion takes effect: (1) the converting entity continues to exist without interruption in the organizational form of the converted entity rather than in the organizational form of the converting entity; (2) all rights, title, and interests to all property owned by the converting entity continues to be owned, subject to any existing liens or other encumbrances on the property, by the converted entity in the new organizational form without: (A) reversion or impairment; (B) further act or deed; or (C) any transfer or assignment having occurred; (3) all liabilities and obligations of the converting entity continue to be liabilities and obligations of the converted entity in the new organizational form without impairment or diminution because of the conversion; (4) the rights of creditors or other parties with respect to or against the previous owners or members of the converting entity in their capacities as owners or members in existence when the conversion takes effect continue to exist as to those liabilities and obligations and may be enforced by the creditors and obligees as if a conversion had not occurred; (5) a proceeding pending by or against the converting entity or by or against any of the converting entity's owners or members in their capacities as owners or members may be continued by or against the converted entity in the new organizational form and by or against the previous owners or members without a need for substituting a party; (6) the ownership or membership interests of the converting entity that are to be converted into ownership or membership interests of the converted entity as provided in the plan of conversion are converted as provided by the plan, and if the converting entity is a domestic entity, the former owners or members of the domestic entity are entitled only to the rights provided in the plan of conversion or a right of dissent and appraisal under this code; (7) if, after the conversion takes effect, an owner or member of the converted entity as an owner or member is liable for the liabilities or obligations of the converted entity, the owner or member is liable for the liabilities and obligations of the converting entity that existed before the conversion took effect only to the extent that the owner or member: (A) agrees in writing to be liable for the liabilities or obligations; (B) was liable, before the conversion took effect, for the liabilities or obligations; or (C) by becoming an owner or member of the converted entity, becomes liable under other applicable law for the existing liabilities and obligations of the converted entity; and (8) if the converted entity is a non-code organization, the converted entity is considered to have: (A) appointed the secretary of state in this state as its agent for service of process in a proceeding to enforce any obligation or the rights of dissenting owners or members of the converting domestic entity; and (B) agreed that the converted entity will promptly pay the dissenting owners or members of the converting domestic entity the amount, if any, to which they are entitled under this code. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.