(a) When a conversion under § 48-21-111 takes effect:

Terms Used In Tennessee Code 48-21-114

  • Articles of conversion: means the form of articles provided for in chapter 204 of this title creating a new LLC and evidencing the conversion of an existing partnership or corporation to the new LLC which shall have all of the assets and liabilities of the former partnership. See Tennessee Code 48-202-101
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Business: includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits. See Tennessee Code 48-202-101
  • Charter: includes amended and restated charters and articles of merger. See Tennessee Code 48-11-201
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Dissolution: means that the LLC has incurred an event under §. See Tennessee Code 48-202-101
  • Document: means :
    (A) Any tangible medium on which information is inscribed, and includes any writing or written instrument. See Tennessee Code 48-11-201
  • domestic business corporation: means a corporation for profit, which is not a foreign corporation, incorporated under or subject to chapters 11-27 of this title. See Tennessee Code 48-11-201
  • Entity: includes the following, whether foreign or domestic: LLCs. See Tennessee Code 48-202-101
  • Filing entity: means an unincorporated entity that is of a type that is created by filing a public organic document. See Tennessee Code 48-21-101
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • Interest holder: means a person who holds of record an interest. See Tennessee Code 48-21-101
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Nonfiling entity: means an unincorporated entity that is of a type that is not created by filing a public organic document. See Tennessee Code 48-11-201
  • 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.
  • Organic document: means a public organic document or a private organic document. See Tennessee Code 48-11-201
  • Organic law: means the statute governing the internal affairs of a domestic or foreign business or nonprofit corporation or unincorporated entity. See Tennessee Code 48-11-201
  • Private organic document: means any document (other than the public organic document, if any) that determines the internal governance of an unincorporated entity. See Tennessee Code 48-11-201
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Tennessee Code 48-202-101
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Secretary of state: means the person who holds the office of secretary of state of Tennessee. See Tennessee Code 48-202-101
  • Service of process: The service of writs or summonses to the appropriate party.
  • Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Tennessee Code 48-11-201
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Survivor: means the corporation or unincorporated entity that is in existence immediately after consummation of a merger or entity conversion pursuant to this chapter. See Tennessee Code 48-21-101
  • Unincorporated entity: means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate, a trust, a state, the United States, or a foreign government. See Tennessee Code 48-11-201
(1) All title to real and personal property, both tangible and intangible, of the converting entity remains in the survivor without reversion or impairment;
(2) All obligations and liabilities of the converting entity continue as obligations and liabilities of the survivor;
(3) An action or proceeding pending against the converting entity continues against the survivor as if the conversion had not occurred;
(4) In the case of a survivor that is a filing entity, its charter or public organic document and its private organic document become effective;
(5) In the case of a survivor that is a nonfiling entity, its private organic document becomes effective;
(6) The shares or interests of the converting entity are reclassified into shares, interests, other securities, obligations, rights to acquire shares, interests, or other securities, or into cash or other property in accordance with the plan of conversion; and the shareholders or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any dissenters’ rights they may have under chapter 23 of this title or under the applicable organic law of the converting entity if it is other than a corporation; and
(7) The survivor is deemed to:

(A) Be incorporated or organized under and subject to the organic law of the converting entity for all purposes;
(B) Be the same corporation or unincorporated entity without interruption as the converting entity; and
(C) Have been incorporated or otherwise organized on the date that the converting entity was originally incorporated or organized.
(b) When a conversion of a domestic business corporation to a foreign other entity becomes effective, the surviving entity is deemed to:

(1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise dissenters’ rights in connection with the conversion; and
(2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title.
(c) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the survivor shall be personally liable only for those debts, obligations, or liabilities of the survivor that arise after the effective time of the articles of entity conversion.
(d) The owner liability of an interest holder in an unincorporated entity that converts to a domestic business corporation shall be as follows:

(1) The conversion does not discharge any owner liability under the organic law of the unincorporated entity to the extent any such owner liability arose before the effective time of the articles of entity conversion;
(2) The interest holder shall not have owner liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion;
(3) The organic law of the unincorporated entity shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred; and
(4) The interest holder shall have whatever rights of contribution from other interest holders are provided by the organic law of the unincorporated entity with respect to any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred.
(e) The converting entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and such conversion shall not be deemed to constitute a dissolution of such entity.
(f) The interests of the interest holders of the converting entity, unless otherwise agreed, shall be cancelled and become of no effect whatsoever, with respect to the survivor, and the former holders of such interests shall be entitled only to the rights provided in the plan of conversion or the organic documents for the conversion of shares into interests in the survivor.
(g) A conversion shall take effect upon the date the articles of conversion are filed, as provided in § 48-21-112, or on such later date as may be specified in the plan of conversion.
(h) Notwithstanding any other law to the contrary, this section and § 48-21-109 shall have no effect on the application of title 67 and other state and federal tax statutes. Any tax consequences of the conversion as referenced herein shall continue to be controlled by applicable state and federal tax statutes as they may be amended from time to time.
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