This CLE webinar 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 potentially also include private investment funds that have invested in the company under the recent series of decisions in Sun Capital Partners III L.P. v. New England Teamsters & Trucking Indus. Pension Fund (Sun Capital).
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 operations of the seller. 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.
The panel 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.