2010 Pennsylvania Code
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 89 - Limited Liability Companies
8965 - Effect of division.

     § 8965.  Effect of division.
        (a)  Multiple resulting companies.--Upon the division
     becoming effective, the dividing company shall be subdivided
     into the distinct and independent resulting companies named in
     the plan of division, and, if the dividing company is not to
     survive the division, the existence of the dividing company
     shall cease. The resulting companies, if they are domestic
     limited liability companies, shall not thereby acquire authority
     to engage in any business or exercise any right that a company
     may not be organized under this chapter to engage in or
     exercise. Any resulting foreign limited liability company that
     is stated in the certificate of division to be a qualified
     foreign limited liability company shall be a qualified foreign
     limited liability company under Subchapter J (relating to
     foreign companies), and the certificate of division shall be
     deemed to be the application for registration of a foreign
     limited liability company of the limited liability company.
        (b)  Property rights; allocations of assets and
     liabilities.--
            (1)  (i)  All the property, real, personal and mixed, of
            the dividing company and all debts due on whatever
            account to it, including subscriptions for membership
            interests and other causes of action belonging to it,
            shall, except as otherwise provided in paragraph (2), to
            the extent allocations of assets are contemplated by the
            plan of division, be deemed without further action to be
            allocated to and vested in the resulting companies on
            such a manner and basis and with such effect as is
            specified in the plan, or per capita among the resulting
            companies as tenants in common if no specification is
            made in the plan, and the title to any real estate or
            interest therein vested in any of the companies shall not
            revert or be in any way impaired by reason of the
            division.
                (ii)  Upon the division becoming effective, the
            resulting companies shall each thenceforth be responsible
            as separate and distinct companies only for such
            liabilities as each company may undertake or incur in its
            own name but shall be liable for the liabilities of the
            dividing company in the manner and on the basis provided
            in subparagraphs (iv) and (v).
                (iii)  Liens upon the property of the dividing
            company shall not be impaired by the division.
                (iv)  To the extent allocations of liabilities are
            contemplated by the plan of division, the liabilities of
            the dividing company shall be deemed without further
            action to be allocated to and become the liabilities of
            the resulting companies on such a manner and basis and
            with such effect as is specified in the plan; and one or
            more, but less than all, of the resulting companies shall
            be free of the liabilities of the dividing company to the
            extent, if any, specified in the plan if in either case:
                    (A)  no fraud on members or violation of law
                shall be effected thereby; and
                    (B)  the plan does not constitute a fraudulent
                transfer under 12 Pa.C.S. Ch. 51 (relating to
                fraudulent transfers).
                (v)  If the conditions in subparagraph (iv) for
            freeing one or more of the resulting companies from the
            liabilities of the dividing company, or for allocating
            some or all of the liabilities of the dividing company,
            are not satisfied, the liabilities of the dividing
            company as to which those conditions are not satisfied
            shall not be affected by the division nor shall the
            rights of creditors thereunder or of any person dealing
            with the company be impaired by the division, and any
            claim existing or action or proceeding pending by or
            against the company with respect to those liabilities may
            be prosecuted to judgment as if the division had not
            taken place, or the resulting companies may be proceeded
            against or substituted in place of the dividing company
            as joint and several obligors on those liabilities,
            regardless of any provision of the plan of division
            apportioning the liabilities of the dividing company.
                (vi)  The conditions in subparagraph (iv) for freeing
            one or more of the resulting companies from the
            liabilities of the dividing company and for allocating
            some or all of the liabilities of the dividing company
            shall be conclusively deemed to have been satisfied if
            the plan of division has been approved by the
            Pennsylvania Public Utility Commission in a final order
            issued after August 21, 2001, that has become not subject
            to further appeal.
            (2)  (i)  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 company (including
            property owned by a foreign limited liability company
            dividing solely under the law of another jurisdiction) to
            a new company resulting from the division shall not be
            effective until one of the following documents is filed
            in the office for the recording of deeds of the county,
            or each of them, in which the tract or parcel is
            situated:
                    (A)  A deed, lease or other instrument of
                confirmation describing the tract or parcel.
                    (B)  A duly executed duplicate original copy of
                the certificate of division.
                    (C)  A copy of the certificate of division
                certified by the Department of State.
                    (D)  A declaration of acquisition setting forth
                the value of real estate holdings in such county of
                the company as an acquired company.
                (ii)  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 company 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).
            (3)  It shall not be necessary for a plan of division to
        list each individual asset or liability of the dividing
        company to be allocated to a new company so long as those
        assets and liabilities are described in a reasonable and
        customary manner.
            (4)  Each new company shall hold any assets and
        liabilities allocated to it as the successor to the dividing
        company, and those assets and liabilities shall not be deemed
        to have been assigned to the new company in any manner,
        whether directly or indirectly or by operation of law.
        (c)  Taxes.--Any taxes, interest, penalties and public
     accounts of the Commonwealth claimed against the dividing
     company that are settled, assessed or determined prior to or
     after the division shall be the liability of any of the
     resulting companies and, together with interest thereon, shall
     be a lien against the franchises and property, both real and
     personal, of all the companies. Upon the application of the
     dividing company, the Department of Revenue, with the
     concurrence of the Office of Employment Security of the
     Department of Labor and Industry, shall release one or more, but
     less than all, of the resulting companies from liability and
     liens for all taxes, interest, penalties and public accounts of
     the dividing company 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.
        (d)  Certificate of organization of surviving company.--The
     certificate of organization of the surviving company, if there
     be one, shall be deemed to be amended to the extent, if any,
     that changes in its certificate are stated in the plan of
     division.
        (e)  Certificates of organization of new companies.--The
     statements that are set forth in the plan of division with
     respect to each new domestic limited liability company and that
     are required or permitted to be set forth in a restated
     certificate of organization of companies organized under this
     chapter or the certificate of organization of each new company
     set forth therein shall be deemed to be the certificate of
     organization of each new company.
        (f)  Managers.--Unless otherwise provided in the plan, the
     managers, if any, of the dividing limited liability company
     shall be the initial managers of each of the resulting
     companies.
        (g)  Disposition of membership interests.--Unless otherwise
     provided in the plan, the membership interests and other
     securities or obligations, if any, of each new company resulting
     from the division shall be distributable to:
            (1)  the surviving company if the dividing company
        survives the division; or
            (2)  the members of the dividing company in the
        proportions in which the members share in distributions, in
        any other case.
        (h)  Conflict of laws.--It is the intent of the General
     Assembly that:
            (1)  The effect of a division of a domestic limited
        liability company shall be governed by the laws of this
        Commonwealth and any other jurisdiction under the laws of
        which any of the resulting companies is organized.
            (2)  The effect of a division on the assets and
        liabilities of the dividing company shall be governed solely
        by the laws of this Commonwealth and any other jurisdiction
        under the laws of which any of the resulting companies is
        organized.
            (3)  The validity of any allocation of assets or
        liabilities by a plan of division of a domestic limited
        liability company, regardless of whether or not any of the
        new companies is a foreign limited liability company, shall
        be governed solely by the laws of this Commonwealth.
            (4)  In addition to the express provisions of this
        subsection, this subchapter shall otherwise generally be
        granted the protection of full faith and credit under the
        Constitution of the United States.
     (June 22, 2001, P.L.418, No.34, eff. 60 days)

        2001 Amendment.  Act 34 amended subsecs. (b) and (c) and
     added subsec. (h).