(a) General rule.--When a division becomes effective, all of the following apply:
(1) If the dividing association is to survive the division:
(i) It continues to exist.
(ii) Its public organic record, if any, is amended as provided in the statement of division.
(iii) Its private organic rules that are to be in record form, if any, are amended to the extent provided in the plan of division.
(iv) Except as otherwise provided by law, all of its rights, privileges, immunities and powers continue to be vested in it without change.
(2) If the dividing association is not to survive the division, the separate existence of the dividing association ceases.
(3) With respect to each new association, all of the following apply:
(i) It comes into existence.
(ii) Any property allocated to it vests in the new association without reversion or impairment, and the division shall not constitute a transfer, directly or indirectly, of any of that property.
(iii) Its public organic record, if any, and private organic rules are effective.
(iv) If it is a limited liability partnership, its statement of registration is effective.
(v) If it is a limited liability limited partnership and is not using the alternative procedure in section 8201(f) (relating to scope), its statement of registration is effective.
(vi) If it is an electing partnership, its statement of election is effective.
(vii) Except as otherwise provided by law, all of the rights, privileges, immunities and powers of the dividing association necessary or desirable for the conduct of the affairs of the new association vest in it without change.
(4) Property of the dividing association:
(i) That is allocated by the plan of division either:
(A) vests in the new associations as provided in the plan of division; or
(B) remains vested in the dividing association.
(ii) That is not allocated by the plan of division:
(A) remains vested in the dividing association, if the dividing association survives the division; or
(B) is allocated to and vests equally in the resulting associations as tenants in common, if the dividing association does not survive the division.
(iii) Vests as provided in this paragraph without transfer, reversion or impairment.
(5) A resulting association to which a cause of action is allocated as provided in paragraph (4) may be substituted or added in any pending action or proceeding to which the dividing association is a party at the effective time of the division.
(6) The liabilities of the dividing association are allocated between or among the resulting associations as provided in section 368 (relating to allocation of liabilities in division) and the division shall not constitute a transfer, directly or indirectly, of any of those liabilities.
(7) The interests in the dividing association that are to be converted or canceled in the division are converted or canceled, and the interest holders of those interests are entitled only to the rights provided to them under the plan of division and to any dissenters rights they may have pursuant to section 317 (relating to contractual dissenters rights in entity transactions) or 363(c) (relating to approval of division).
(b) Dividing association not dissolved.--Except as provided in the organic law or organic rules of the dividing association, the division does not give rise to any rights that an interest holder, governor or third party would have upon a dissolution, liquidation or winding up of the dividing association.
(c) New interest holder liability.--When a division becomes effective, a person that did not have interest holder liability with respect to the dividing association and that becomes subject to interest holder liability with respect to an association as a result of the division has interest holder liability only to the extent provided by the organic law of the association and only for those liabilities that arise after the division becomes effective.
(d) Prior interest holder liability.--When a division becomes effective, the interest holder liability of a person that ceases to hold an interest in the dividing association that is a domestic entity with respect to which the person had interest holder liability is as follows:
(1) The division does not discharge any interest holder liability under the organic law of the domestic entity to the extent the interest holder liability arose before the division became effective.
(2) The person does not have interest holder liability under the organic law of the domestic entity for any debt, obligation or other liability that arises after the division becomes effective.
(3) The organic law of the domestic entity continues to apply to the release, collection or discharge of any interest holder liability preserved under paragraph (1) as if the division had not occurred.
(4) The person has whatever rights of contribution from any other person as are provided by other law or the organic law or organic rules of the domestic entity with respect to any interest holder liability preserved by paragraph (1) as if the division had not occurred.
(e) Registration of registered foreign association.--When a division of a registered foreign association in which at least one of the resulting associations is a domestic entity becomes effective, the registration to do business of the dividing association is canceled if it does not survive the division.
(f) Real property.--Except with regard to the real property of a dividing association that is a domestic nonprofit corporation, the allocation of any fee or freehold interest or leasehold having a remaining term of 30 years or more in any tract or parcel of real property situate in this Commonwealth owned by a dividing association, including property owned by a foreign association dividing solely under the laws of another jurisdiction, to a new association is not effective until one of the following documents is filed by the office for the recording of deeds of the county, or each of them, in which the tract or parcel is situated:
(1) A deed, lease or other instrument of confirmation describing the tract or parcel.
(2) A duly executed duplicate original copy of the statement of division.
(3) A copy of the statement of division certified by the department.
(4) A declaration of acquisition stating the value of real estate holdings in the county of the new association as an acquired association.
(g) Secured collateral.--The allocation to a new association of property that is collateral covered by an effective financing statement shall not be effective until a new financing statement naming the new association as a debtor is effective under 13 Pa.C.S. Div. 9 (relating to secured transactions) as enacted in the relevant jurisdiction.
(h) Vehicles.--The provisions of 75 Pa.C.S. § 1114 (relating to transfer of vehicle by operation of law) shall not be applicable to an allocation of ownership of any motor vehicle, trailer or semitrailer to a new association under this section or under a similar law of any other jurisdiction, but any such allocation shall be effective only upon compliance with the requirements of 75 Pa.C.S. § 1116 (relating to issuance of new certificate following transfer), unless the dividing association is a domestic nonprofit corporation.
(i) Disposition of interests.--Unless otherwise provided in the plan of division, the interests and any securities or obligations of each new association shall be distributed to:
(1) the dividing association, if it survives the division; or
(2) the holders of the common or other residuary interest of the dividing association that do not assert dissenters rights, pro rata, if the dividing association does not survive the division.
(j) Distribution tests not applicable.--An allocation, directly or indirectly, of property, liabilities or interests in a division is not a distribution for purposes of the organic law of the dividing association or any of the resulting associations.
Credits
2014, Oct. 22, P.L. 2640, No. 172, § 9, effective July 1, 2015. Amended 2016, Nov. 21, P.L. 1328, No. 170, § 2.2, effective in 90 days [Feb. 21, 2017]; 2022, Nov. 3, P.L. 1791, No. 122, § 17, effective in 60 days [Jan. 3, 2023].
15 Pa.C.S.A. § 367, PA ST 15 Pa.C.S.A. § 367
Current through Act 11 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
