Reference Case: Liability for Legacy Debt After Conversion from a One-person Company to an Ordinary LLC
A one-person limited liability company that converts into an ordinary limited liability company during litigation does not disrupt the proceedings and does not automatically cut off liability for debts formed before the change. For pre-change debts, the original sole shareholder still bears the relevant burden of proving the company's separate property status and cannot defeat creditors merely by later changing the corporate form.
Holding
A one-person limited liability company that converts into an ordinary limited liability company during litigation does not disrupt the proceedings and does not automatically cut off liability for debts formed before the change. For pre-change debts, the original sole shareholder still bears the relevant burden of proving the company's separate property status and cannot defeat creditors merely by later changing the corporate form.