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Novations- Inc. to LLC


MichelleE

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If converting from a corporation to a LLC is a novation needed? Many states allow a certificate of conversion to be filed and thus a streamlined process. I don't think a novation would be needed in this instance but maybe a change of name. However, if converting from an Inc. to an LLC and a new LLC has to be formed I think you would need to file a novation agreement. Any thoughts on this? I saw another topic about transferring from an LLC to an Inc. which would more clearly require a novation but I think it's different when going from an Inc. to an LLC because the Inc. doesn't always dissolve depending on how the conversion takes place. 

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Have you read FAR Subpart 42.12?  Please do.  The question is whether or not the LLC is a successor in interest.

If you think of the LLC as a successor in interest, then you follow FAR 42.1203 and 42.1204.

If you think of the LLC as merely a change in name (and not a successor in interest), then you follow FAR 42.1203 and 42.1205.

I lean towards the former.

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