(a) An entity that converts into another entity pursuant to this article is for all purposes the same entity that existed before the conversion.
(b) When a conversion takes effect, all of the following apply:
(1) All the rights and property, whether real, personal, or mixed, of the converting entity remains vested in the converted entity.
(2) All debts, liabilities, and obligations of the converting entity continue as debts, liabilities, and obligations of the converted entity.
(3) All rights of creditors and liens upon the property of the converting entity shall be preserved unimpaired and remain enforceable against the converted entity to the same extent as against the converting entity as if the conversion had not occurred.
(4) Any action or proceeding pending by or against the converting entity may be continued against the converted entity as if the conversion had not occurred.
(c) A partner of a converting partnership is liable for:
(1) All obligations of the converting partnership for which the partner was personally liable before the conversion.
(2) All obligations of the converted entity incurred after the conversion takes effect, but those obligations may be satisfied only out of property of the entity if (A) the converted other business entity is a limited partnership and the partner becomes a limited partner, (B) the converted other business entity is a limited liability company and the partner becomes a member, unless the articles of organization or the operating agreement of the limited liability company provide otherwise, or (C) the converted other business entity is a corporation and the partner becomes a shareholder.
(d) A partner of a partnership that converted from an other business entity is liable for any and all obligations of the converting other business entity for which the partner was personally liable before the conversion, but only to the extent the partner was liable for the obligation of the converting entity prior to the conversion.
(e) A partner of a converting partnership, who does not vote in favor of the conversion and does not agree to become a partner, member, shareholder, or holder of interest of the converted other business entity shall have the right to dissociate from the partnership, as of the date the conversion takes effect. Within 10 days after the approval of the conversion by the partners as required under this article, the converting partnership shall send notice of the approval of the conversion to each partner that has not approved the conversion, accompanied by copies of Section 16701 and a brief description of the procedure to be followed under that section if the partner wishes to dissociate from the partnership. A partner that desires to dissociate from the converting partnership shall send written notice of that dissociation within 30 days after the date of the notice of the approval of the conversion. The converting partnership shall cause the partner’s interest in the entity to be purchased under Section 16701. The converting partnership is bound under Section 16702 by an act of a general partner dissociated under this subdivision, and the partner is liable under Section 16703 for transactions entered into by the converted entity after the conversion takes effect. The dissociation of a partner in connection with a conversion pursuant to the terms of this subdivision shall not be deemed to be a wrongful dissociation under Section 16602.
(Amended by Stats. 2002, Ch. 480, Sec. 22. Effective January 1, 2003.)
Last modified: October 25, 2018