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Investment Plus Partnership-in-Fact = Withdrawal Liability

April 14, 2016

Authors

Chris Rylands and Brian Berglund

Investment Plus Partnership-in-Fact = Withdrawal Liability

April 14, 2016

by: Chris Rylands and Brian Berglund

Org ChartPreviously, we wrote about the First Circuit decision that a private equity fund constituted a “trade or business” under ERISA as amended by the Multiemployer Pension Plan Amendments Act (“MPPAA”). That dry description is actually very significant since it would mean that private equity funds and their other portfolio companies could be responsible for withdrawal liability, potentially in the millions of dollars, when a portfolio company withdraws from a multiemployer plan. Based on a recent District Court case in that same dispute, it may be even harder for private equity funds and their portfolio companies to escape liability, which could have implications for those companies and the companies that buy them.

By way of background, multiemployer pension plans are pension plans into which (as the

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Supreme Court Clarifies Effect of Motions for Attorney’s Fees on Finality

January 29, 2014

Authors

benefitsbclp

Supreme Court Clarifies Effect of Motions for Attorney’s Fees on Finality

January 29, 2014

by: benefitsbclp

In a decision issued on January 15, the Supreme Court clarified that a pending motion for attorney’s fees does not prevent a judgment on the merits from becoming final for appellate purposes under 28 U.S.C. §1291, even when those fees are contractually provided for.

Ray Haluch Gravel Co. v. Central Pension Fund of the International Union of Operating Engineers & Participating Employers involved the timeliness of an appeal of a judgment against an employer in an ERISA case. The employer was sued by a union for failing to make contributions, required under a collective bargaining agreement, to various benefit funds. The agreement included a provision requiring the employer to pay any attorney’s fees incurred by the union in collecting payments owed to the benefit funds.

The district court entered judgment on the merits, awarding the union far less than it had requested, and more than a

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Piercing the Veil: Private Equity Fund Found to be “Trade or Business” Under MPPAA

August 6, 2013

Authors

benefitsbclp

Piercing the Veil: Private Equity Fund Found to be “Trade or Business” Under MPPAA

August 6, 2013

by: benefitsbclp

On July 24, 2013, in a case of first impression (Sun Capital Partners III LP vs. New England Teamsters & Trucking Indus. Pension Fund, No.12-2312), the First Circuit held that a private equity fund was a “trade or business” under ERISA as amended by the Multiemployer Pension Plan Amendment Act (“MPPAA”), and thus potentially liable for withdrawal liability incurred by its portfolio company if that company was under common control with the fund.* The court applied an “investment plus” test and found that the private equity fund was not merely a “passive investor” but had sufficient management and operational involvement with its portfolio company so as to make it a trade or business.

Sun Fund IV and Sun Fund III (collectively, the “Sun Funds”) are two funds held by private equity firm Sun Capital Advisors, Inc. Together, the Sun Funds held 100% of the

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