Replies to post #451533 on Fannie Mae-No Politics (FNMA)

[contrarian bull]

Debt is not Transferred to LLC

Correct. That is why all debt and liabilities must paid off prior to assets transferring to a new LLC.

If it is a voluntary conversion to a NEWCO then the debt would have to be paid in full or via a negotiated settlement with the debtors.

If it is an involuntary conversion or if they don't have enough assets to pay off all the debt then it would have to go through the bankruptcy process to get those debts off the books.

In either case the new company typically has no debt - unless they drag some along as part of a negotiated deal.