ERISA Successor and Affiliate Liability in Asset Sales and Distressed Benefit Plans

Mitigating Controlled Group and Successor Liability for Affiliated Companies, M&As, and Corporate Reorganizations

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, May 3, 2016

Recorded event now available

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Program Materials

This CLE webinar will provide ERISA counsel with a review of controlled group and successor liability theories by which an entity can be held liable for unpaid or underfunded pension liabilities of another entity. The panel will discuss case law and regulatory developments and offer best practices to avoid affiliate or successor liability.

Description

The Pension Benefit Guaranty Corporation (PBGC) and multi-employer pension plans are increasingly seeking solvent entities to satisfy distressed pension claims. There has been a significant amount of litigation by multi-employer plans and the PBGC seeking to impose controlled group liability on affiliated companies.

The First Circuit’s ruling in Sun Capital Partners exposes a significant legal risk for private equity funds with respect to their portfolio companies. The court agreed with a prior PBGC ruling that the fund was part of the controlled group and thus responsible for withdrawal liability from a multi-employer plan.

This year the Ninth Circuit in Resilient Floor Covering Pension Trust Fund Board of Trustees v. Michael’s Floor Covering, Inc. and the Seventh Circuit in Tsareff v. Manweb Services, Inc. have held that an asset purchaser could be liable as a “successor” for the withdrawal liability of the seller of assets.

Successor liability and alter ego are similar means of targeting deep pockets to satisfy underfunded or unpaid benefit plan liabilities in the context of M&A asset sales. In such cases, purchasers can find themselves liable for sellers’ withdrawal liability and delinquent contributions to their multi-employer pension and welfare plans.

Listen as our experienced panel of ERISA attorneys guides you through the controlled group and successor liability rules for affiliate entity liability for unfunded or underfunded benefit plans.

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Outline

  1. Controlled group liability
    1. Unfunded pension liability and PBGC claims
    2. Multi-employer pension plan withdrawal liability
    3. Identifying controlled group members
    4. Defending liability assessments against alleged controlled group members
    5. Analyzing potential liability of controlled group
    6. Private equity fund liability for plan liabilities of portfolio companies: Sun Capital Partners (1st Cir. 2013)
  2. Successor liability
    1. Common law standards for successor liability
    2. Expanded standards of successor liability under ERISA
    3. Corporate spin-offs and pension liabilities
  3. Alter ego liability
  4. Evade or avoid liability
  5. Liability of foreign parents for pension liabilities of U.S. subsidiaries: PBGC v. Asahi Tec Corp.

Benefits

The panel will review these and other key issues:

  • How has controlled group liability been sought by multi-employer plans and the PBGC in the current economic climate?
  • How does the First Circuit’s Sun Capital Partners ruling regarding controlled group liability for private equity funds and their portfolio companies impact the structuring of private equity deals?
  • How do the Ninth Circuit's decision in Resilient Floor Covering Pension Trust Fund and the Seventh Circuit's decision in Tsareff impact asset purchase agreements?
  • What steps can buyers in asset purchase deals take to minimize successor liability for the seller’s plan liabilities?
  • What are some options for avoiding or minimizing withdrawal liability in corporate transactions?

Faculty

Cipolla, Robert
Robert M. Cipolla

Senior Counsel
McGuireWoods

Mr. Cipolla assists a wide variety of clients including public, private, tax-exempt and governmental entities on...  |  Read More

French, Taylor
Taylor Wedge French

Partner
McGuireWoods

Mr. French's employee benefits practice covers a wide-range of traditional executive compensation and employee...  |  Read More

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