Section 44 Additional Considerations When a Split-Up Is Involved

• Library: Bus Trans 2005

In a split-up, a somewhat different problem arises in that the original corporation is often dissolved before payment of its debts, the debts usually being assumed by the newly formed subsidiaries. Even if all known debts have been paid, there is still the issue of unknown or contingent liabilities. Using the split-up example in §1.38 above, if Corporation X becomes insolvent shortly after ABC Corporation is dissolved, the creditors of Corporation X, who were formerly creditors of ABC Corporation, may have...