2016 Arizona Revised Statutes
Title 29 - Partnership
§ 29-2606 Effect of division

29-2606. Effect of division

A. When a division becomes effective:

1. If the dividing entity is to survive the division, the dividing entity continues to exist.

2. If the dividing entity is not to survive the division, the dividing entity ceases to exist.

3. The resulting entities created in the division come into existence.

4. As and to the extent specified in the plan of division, property, including rights, privileges, immunities and powers, of the dividing entity is allocated to and vests in the resulting entities created in the division or continues to be vested in the dividing entity, in each case automatically and without assignment, reversion or impairment.

5. Any property, including rights, privileges, immunities and powers, not allocated by the plan of division:

(a) If the dividing entity survives the division, remains vested in the dividing entity.

(b) If the dividing entity does not survive the division, is allocated to and vests equally in the resulting entities as tenants in common, in each case automatically and without assignment, reversion or impairment.

6. Any pending action or proceeding to which the dividing entity is a party at the effective time of the division continues and the name of a new resulting entity to which a cause of action is allocated as provided in paragraphs 4 and 5 of this subsection may be substituted for the name of the dividing entity or added in that action or proceeding.

7. All obligations of the dividing entity are allocated between or among the resulting entities as provided in section 29-2607.

8. If the dividing entity survives the division:

(a) Its public organizational document, if any, is amended if and to the extent provided in the statement of division.

(b) Its private organizational documents that are to be in a record, if any, are amended if and to the extent provided in the plan of division.

9. The interests in the dividing entity that are to be converted in the division are converted and the interest holders of those interests are entitled only to the rights provided to them under the plan of division and to any appraisal rights they may have under section 29-2109 and the dividing entity's governing statute.

B. Except as provided in the plan of division or in the governing statute or organizational documents of the dividing entity, the division does not give rise to any rights that an interest holder, governor or third party would otherwise have on a dissolution, liquidation or winding up of the dividing entity.

C. When a division becomes effective, a person that did not have interest holder liability with respect to the dividing entity and that becomes subject to interest holder liability with respect to the domestic resulting entity as a result of the division has interest holder liability only to the extent provided by the governing statute or organizational documents of the domestic resulting entity, and then only for those obligations that arise after the division becomes effective.

D. When a division becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic dividing 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 governing statute or organizational documents of the domestic dividing 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 governing statute or organizational documents of the domestic dividing entity for any obligation that arises after the division becomes effective.

3. The governing statute and organizational documents of the domestic dividing entity continue to apply to the release, collection or discharge of any interest holder liability preserved under paragraph 1 of this subsection as if the division had not occurred.

4. The person has the same rights of contribution from any other person as are provided by the governing statute or organizational documents of the domestic dividing entity with respect to any interest holder liability preserved under paragraph 1 of this subsection as if the division had not occurred.

E. When a division becomes effective, a foreign entity that is a resulting entity:

1. May be served with process in this state for the collection and enforcement of any obligations of a domestic dividing entity that were allocated to the foreign entity pursuant to this article, including obligations arising out of the exercise of appraisal rights.

2. If it is not a qualified foreign entity, appoints the appropriate filing authority as its agent for service of process for collecting or enforcing those obligations.

F. When a division becomes effective, the authority, registration or other qualification granted by the appropriate filing authority to transact business or conduct affairs in this state of a foreign dividing entity that does not survive the division is automatically revoked or cancelled.

G. A person does not have constructive notice of an allocation of an interest in real estate in a division until the allocation is recorded in compliance with the requirements for recording of interests in real estate in the state where the real property is located.