A.Except as provided in subsections B and C of this section, when a division becomes effective, each resulting entity is liable, jointly and severally, with the other resulting entities for the obligations of the dividing entity that existed immediately before the effectiveness of the division, and all those obligations of the dividing entity are automatically obligations of each resulting entity without assignment, assumption or delegation.
B.A resulting entity is not liable for an obligation of the dividing entity if and to the extent any of the following applies:
1.The obligee has consented in writing to the obligations being allocated to, or continuing to be the obligation of, one or more of the other resulting entities and the plan of division states that the obligation is being
Free access — add to your briefcase to read the full text and ask questions with AI
A. Except as provided in subsections B and C of this section, when a division becomes effective, each resulting entity is liable, jointly and severally, with the other resulting entities for the obligations of the dividing entity that existed immediately before the effectiveness of the division, and all those obligations of the dividing entity are automatically obligations of each resulting entity without assignment, assumption or delegation.
B. A resulting entity is not liable for an obligation of the dividing entity if and to the extent any of the following applies:
1. The obligee has consented in writing to the obligations being allocated to, or continuing to be the obligation of, one or more of the other resulting entities and the plan of division states that the obligation is being allocated to, or will continue to be the obligation of, those entities, or those entities have otherwise expressly assumed the obligation.
2. A court or other tribunal of competent jurisdiction or a governmental agency having jurisdiction as to the matter has issued an order, finding, rule, regulation or other ruling that has become final and nonappealable and in which the obligation is deemed to be allocated to, or to continue to be the obligation of, one or more of the other resulting entities.
3. Recourse regarding the obligation is, by contract or by law, limited to an asset of one or more of the other resulting entities.
4. Recourse regarding the obligation is, by contract or by law, limited to one or more of the other resulting entities.
C. A resulting entity may enter into agreements or other arrangements for purposes of mitigating risks associated with the entity's liability for an obligation of the dividing entity. The agreements or arrangements may be entered into with one or more of the other resulting entities or with third parties. The agreements or arrangements may include indemnification, contribution, guaranty, insurance, offset, loan, investment and any other lawful means of dealing with the risks associated with the liability for the obligation.
D. Unless the obligee has otherwise agreed or consented, liens, security interests and other encumbrances on the property of the dividing entity are not impaired by the division, regardless of whether that property has become the property of a resulting entity that is not the dividing entity, regardless of whether the dividing entity is one of the resulting entities and regardless of any otherwise enforceable allocation of obligations of the dividing entity.
E. If the dividing entity is bound by a security agreement governed by title 47, chapter 9 or its counterpart as enacted in any jurisdiction and the security agreement provides that the security interest attaches to after-acquired collateral, each resulting entity is bound by the security agreement unless the secured party has otherwise agreed or consented.
F. For purposes of and notwithstanding any provision of the governing statute of the dividing entity or any resulting entity, the division is deemed not to be a dividend or other distribution by the dividing entity or any resulting entity.