6. Organizational Changes
If two limited liability companies want to combine their resources to increase efficiency and profitability, one LLC can transfer its assets to the other in exchange for an interest as a member of the second LLC and then dissolve and distribute the interest to its members. This makes the members of both LLCs the members of a single LLC, but it may require the transfers of many individual assets, which can be cumbersome and may violate due on sale clauses or the like. It is generally simpler and cleaner to merge the two LLCs if this is possible under applicable state law. Form 6.1 is designed for a statutory merger.
The other form in this category is for the conversion of a partnership or limited partnership into an LLC. Such a conversion gives all partners limited liability and can be accomplished by the partnership’s transferring its assets to a newly-formed LLC in exchange for an interest as a member and then dissolving and distributing the interest to its partners. If a state statutory procedure is available, the conversion of a partnership to a limited liability company can be simplified. Form 6.2 contains documents for making a conversion with or without the benefit of a statutory procedure.
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