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 premium CLE video webinar with Q&A


Conducted on Wednesday, October 6, 2021

Recorded event now available

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Course Materials

This CLE course will provide ERISA counsel with a review of controlled group and successor liability theories by which an entity can be held jointly and severally liable for unpaid or underfunded pension liabilities of another entity.

Description

Pension funding obligations are not limited to the immediate employer and sponsor of a pension plan. Under ERISA, each member of a "controlled group" is jointly and severally liable for certain defined benefit pension plan liabilities, including withdrawal liability that arises when an employer ceases contributions to a multiemployer pension plan. A company's "controlled group" could also include private investment funds invested in the company.

In addition to controlled group liability, courts have imposed successor liability on a buyer in asset deals where the buyer had actual or even constructive notice of the pension plan liabilities before the sale and continues the seller's operations. The majority of those cases have involved actions by multiemployer pension plans to collect withdrawal liability from unrelated third parties, but this analysis of successor liability could also become more prevalent in the single-employer plan context.

Controlled group and successor liability are a means of targeting deep pockets to satisfy benefit plan liabilities in the context of asset sales and private equity investments. Also, successor liability claims are not limited to traditional defined benefit and multiemployer plans, as similar claims may arise in the context of other types of ERISA plans.

Listen as the panel provides ERISA counsel with a review of controlled group and successor liability theories by which an entity can be held jointly and severally liable for unpaid or underfunded pension liabilities of another entity.

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Outline

  1. Controlled group liability
    1. Unfunded pension liability and PBGC claims
    2. Multiemployer pension plan withdrawal liability
    3. Identifying controlled group members
    4. Analyzing potential liability of the controlled group
    5. Private equity fund liability for plan liabilities of portfolio companies
  2. Successor liability
    1. Common law standards for successor liability
    2. Expanded rules of successor liability under ERISA
    3. Corporate spin-offs and pension liabilities
  3. Transaction considerations

Benefits

The panel will review these and other key issues:

  • Controlled group liability sought by multiemployer plans and the PBGC
  • Determining what constitutes a "controlled group" and "trades or businesses"
  • Expanded standards of successor liability and methods to limit them
  • Steps buyers in asset purchase deals can take to minimize successor liability for the seller's plan liabilities

Faculty

Carrasco, Lisa
Lisa Rhein Carrasco

Partner
Smith, Gambrell & Russell

Ms. Carrasco is a Partner in the Executive Compensation and Employee Benefits Practice of Smith, Gambrell &...  |  Read More

Jara, José
José M. Jara

Counsel
Fox Rothschild

Mr. Jara has over 20 years of ERISA and employee benefits experience, ranging from governmental compliance, fiduciary...  |  Read More

Keller, Eric
Eric R. Keller

Partner
Paul Hastings

Mr. Keller represents clients in all aspects of executive compensation and employee benefits law. In this regard, he...  |  Read More

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