Arizona Laws 29-2607. Allocation of obligations in division
A. Except as provided in subsections B and C of this section, when a division becomes effective, each resulting entity is liable, jointly and severally, with the other resulting entities for the obligations of the dividing entity that existed immediately before the effectiveness of the division, and all those obligations of the dividing entity are automatically obligations of each resulting entity without assignment, assumption or delegation.
Terms Used In Arizona Laws 29-2607
- Contract: A legal written agreement that becomes binding when signed.
- Dividing entity: means the domestic entity that approves a plan of division pursuant to section 29-2603 or the foreign entity that approves a division pursuant to the law of its jurisdiction of organization. See Arizona Laws 29-2102
- Division: means a transaction authorized by article 6 of this chapter. See Arizona Laws 29-2102
- Entity: means any of the following:
(a) A corporation. See Arizona Laws 29-2102
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Interest: means a governance interest or a transferable interest, including a share or membership in a corporation. See Arizona Laws 29-2102
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Obligation: means a debt, loss or liability or any other obligation arising in any manner, regardless of whether it is secured, contingent or liquidated. See Arizona Laws 29-2102
- Plan: means a plan of merger, interest exchange, conversion, domestication or division. See Arizona Laws 29-2102
- Property: includes both real and personal property. See Arizona Laws 1-215
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
- Statute: A law passed by a legislature.
- Writing: includes printing. See Arizona Laws 1-215
B. A resulting entity is not liable for an obligation of the dividing entity if and to the extent any of the following applies:
1. The obligee has consented in writing to the obligations being allocated to, or continuing to be the obligation of, one or more of the other resulting entities and the plan of division states that the obligation is being allocated to, or will continue to be the obligation of, those entities, or those entities have otherwise expressly assumed the obligation.
2. A court or other tribunal of competent jurisdiction or a governmental agency having jurisdiction as to the matter has issued an order, finding, rule, regulation or other ruling that has become final and nonappealable and in which the obligation is deemed to be allocated to, or to continue to be the obligation of, one or more of the other resulting entities.
3. Recourse regarding the obligation is, by contract or by law, limited to an asset of one or more of the other resulting entities.
4. Recourse regarding the obligation is, by contract or by law, limited to one or more of the other resulting entities.
C. A resulting entity may enter into agreements or other arrangements for purposes of mitigating risks associated with the entity’s liability for an obligation of the dividing entity. The agreements or arrangements may be entered into with one or more of the other resulting entities or with third parties. The agreements or arrangements may include indemnification, contribution, guaranty, insurance, offset, loan, investment and any other lawful means of dealing with the risks associated with the liability for the obligation.
D. Unless the obligee has otherwise agreed or consented, liens, security interests and other encumbrances on the property of the dividing entity are not impaired by the division, regardless of whether that property has become the property of a resulting entity that is not the dividing entity, regardless of whether the dividing entity is one of the resulting entities and regardless of any otherwise enforceable allocation of obligations of the dividing entity.
E. If the dividing entity is bound by a security agreement governed by Title 47, Chapter 9 or its counterpart as enacted in any jurisdiction and the security agreement provides that the security interest attaches to after-acquired collateral, each resulting entity is bound by the security agreement unless the secured party has otherwise agreed or consented.
F. For purposes of and notwithstanding any provision of the governing statute of the dividing entity or any resulting entity, the division is deemed not to be a dividend or other distribution by the dividing entity or any resulting entity.