In a change of legal form, the same company generally remains the debtor for its existing liabilities. However, the new legal form may change the future liability rules for the company and its members. In a merger, the successor generally assumes the transferring company’s existing company debts, including those not yet due and those in dispute. In a division, liabilities must be clearly allocated to the participating companies in the reorganization plan. Statutory liability and creditor-protection rules that may apply in addition to the internal allocation must also be taken into account. Guarantees, sureties, security interests, indemnities, and ongoing legal disputes must be included in the liability review. Company officers are not personally liable solely because they prepare or implement a reorganization. However, personal liability may arise if members of management or other company bodies breach their duties and thereby cause attributable loss. The completeness of liability lists, adequate information for decision-makers, and compliance with resolution and registration requirements require particular care. The reorganization plan, risk review, resolutions, and evidence of implementation should document how liability issues were identified and addressed.
Liability Consequences of a Company Reorganization in Georgia
The liability consequences of a company reorganization in Georgia depend on the chosen form of restructuring and the effective allocation of existing obligations. In addition to the liability of the continuing or successor company, any potential personal liability of the company’s officers involved must be examined separately.
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