Ala. Code § 10A-8A-9.11

Current through the 2024 Regular Session.

Section 10A-8A-9.11 - Liability of partner after conversion or merger

(a) A conversion or merger under this article does not discharge any liability under Section 10A-8A-3.06, 10A-8A-7.02, or 10A-8A-7.03 of a person that was a partner in or dissociated as a partner from a converting or constituent partnership, but:

(1) the provisions of this chapter pertaining to the collection or discharge of the liability continue to apply to the liability;

(2) for the purposes of applying those provisions, the converted or surviving organization is deemed to be the converting or constituent partnership; and

(3) if a person is required to pay any amount under this subsection:

(A) the person has a right of contribution from each other person that was liable as a partner under Section 10A-8A-3.06 when the obligation was incurred and has not been released from the obligation under Section 10A-8A-7.02 or 10A-8A-7.03; and

(B) the contribution due from each of those persons is in proportion to the right to receive distributions in the capacity of partner in effect for each of those persons when the obligation was incurred.

(b) In addition to any other liability provided by law:

(1) a person that immediately before a conversion or merger became effective was a partner in a converting or constituent partnership that was not a limited liability partnership is personally liable for each obligation of the converted or surviving organization arising from a transaction with a third party after the conversion or merger becomes effective, if, at the time the third party enters into the transaction, the third party:

(A) does not have notice of the conversion or merger; and

(B) reasonably believes that:

(i) the converted or surviving business is the converting or constituent partnership;

(ii) the converting or constituent partnership is not a limited liability partnership; and

(iii) the person is a partner in the converting or constituent partnership; and

(2) a person that was dissociated as a partner from a converting or constituent partnership before the conversion or merger became effective is personally liable for each obligation of the converted or surviving organization arising from a transaction with a third party after the conversion or merger becomes effective, if:

(A) immediately before the conversion or merger became effective the converting or surviving partnership was not a limited liability partnership; and

(B) at the time the third party enters into the transaction the third party:

(i) does not have notice of the dissociation;

(ii) does not have notice of the conversion or merger; and

(iii) reasonably believes that the converted or surviving organization is the converting or constituent partnership, the converting or constituent partnership is not a limited liability partnership, and the person is a partner in the converting or constituent partnership.

Ala. Code § 10A-8A-9.11 (1975)

Added by Act 2018-125,§ 7, eff. 1/1/2019.