[§425E-1112] Power of general partners and persons dissociated as general partners to bind organization after conversion or merger.

370 words·~2 min read·/hi/425e-1112

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)An act of a person that immediately before a conversion or merger became effective was a general partner in a converting or constituent limited partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:

(1)Before the conversion or merger became effective, the act would have bound the converting or constituent limited partnership under section 425E-402; and

(2)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 the converted or surviving business is the converting or constituent limited partnership and that the person is a general partner in the converting or constituent limited partnership.

(b)An act of a person that before a conversion or merger became effective was dissociated as a general partner from a converting or constituent limited partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:

(1)Before the conversion or merger became effective, the act would have bound the converting or constituent limited partnership under section 425E-402 if the person had been a general partner; and

(2)At the time the third party enters into the transaction, less than two years have passed since the person dissociated as a general partner and the third party:

(A)Does not have notice of the dissociation;

(B)Does not have notice of the conversion or merger; and

(C)Reasonably believes that the converted or surviving organization is the converting or constituent limited partnership and that the person is a general partner in the converting or constituent limited partnership.

(c)If a person having knowledge of the conversion or merger causes a converted or surviving organization to incur an obligation under subsection

(a)or (b), the person shall be liable:

(1)To the converted or surviving organization for any damage caused to the organization arising from the obligation; and

(2)If another person is liable for the obligation, to that other person for any damage caused to that other person arising from the liability. [L 2003, c 210, pt of §1]