§ 368. Allocation of liabilities in division.
(a) General rule.--Except as provided in this section, when a division becomes effective, a resulting association is responsible:
(1) Individually for the liabilities the resulting association undertakes or incurs in its own name after the division.
(2) Individually for the liabilities of the dividing association that are allocated to or remain the liability of that resulting association to the extent specified in the plan of division.
(3) Jointly and severally with the other resulting associations for the liabilities of the dividing association that are not allocated by the plan of division.
(b) Joint and several liability.--If an allocation of property or liabilities in a division is ineffective or voidable pursuant to fraudulent transfer or similar law, both of the following apply:
(1) The allocations of liabilities in the plan of division are ineffective and the liabilities of the dividing association become liabilities of all of the resulting associations, jointly and severally.
(2) The validity and effectiveness of the division are not affected thereby.
(c) Breach of obligation.--If a division breaches an obligation of the dividing association, all of the resulting associations are liable, jointly and severally, for the breach, but the validity and effectiveness of the division are not affected thereby.
(d) Application of fraudulent transfer law.--In applying the law governing fraudulent transfers to a division:
(1) The law applies to the dividing association as follows:
(i) If it does not survive the division, it is not subject to that law.
(ii) If it survives the division, it is subject to that law only in its capacity as a resulting association.
(2) The law applies to each resulting association as follows:
(i) The association is treated as a debtor.
(ii) The liabilities allocated to the association are treated as an obligation incurred by the debtor.
(iii) The association is treated as not having received a reasonably equivalent value in exchange for incurring the obligation.
(iv) The property allocated to the association is treated as remaining property.
(e) Distribution tests not applicable.--A direct or indirect allocation of property or liabilities in a division is not a distribution for purposes of the organic law of the dividing association or any of the resulting associations.
(f) Liens and other charges.--Liens, security interests and other charges on the property of the dividing association are not impaired by the division, notwithstanding any otherwise enforceable allocation of liabilities of the dividing association.
(g) Security agreements.--If the dividing association is bound by a security agreement governed by 13 Pa.C.S. Div. 9 (relating to secured transactions) as enacted in any jurisdiction and the security agreement provides that the security interest attaches to after-acquired collateral, each resulting association is bound by the security agreement.
(h) Creditors and guarantors.--An allocation of a liability does not:
(1) Affect the rights under other law of a creditor owed payment of the liability or performance of the obligation that creates the liability, except that those rights are available only against an association responsible for the liability or obligation under this section.
(2) Release or reduce the obligation of a surety or guarantor of the liability or obligation.
(i) Regulatory approvals.--The conditions in this section for freeing one or more of the resulting associations from the liabilities of the dividing association and for allocating some or all of the liabilities of the dividing association shall be conclusively deemed to have been satisfied if the plan of division has been approved by the Department of Banking and Securities, the Insurance Department or the Pennsylvania Public Utility Commission in a final order issued after August 21, 2001, that is not subject to further appeal.
(j) Taxes.--Any taxes, interest, penalties and public accounts of the Commonwealth claimed against the dividing association that are settled, assessed or determined prior to or after the division shall be the liability of all of the resulting associations and, together with interest thereon, shall be a lien against the franchises and property of each resulting association. Upon the application of the dividing association, the Department of Revenue, with the concurrence of the Department of Labor and Industry, shall release one or more, but less than all, of the resulting associations from liability and liens for all taxes, interest, penalties and public accounts of the dividing association due the Commonwealth for periods prior to the effective date of the division if those departments are satisfied that the public revenues will be adequately secured.
Cross References. Section 368 is referred to in sections 362, 367 of this title.
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