Pointers For PE Firms — Post Sun Capital ERISA Ruling

Law360, New York (November 1, 2012, 12:24 PM EDT) -- Under certain circumstances, a private equity fund that owns 80 percent or more of a bankrupt portfolio company (or in some cases, discussed below, less than 80 percent) is liable for 100 percent of the portfolio company’s unpaid pension obligations. However, if the PE fund is formed as a partnership or LLC, this “Employee Retirement Income Security Act controlled group liability doctrine” applies only if the PE fund is engaged in a “trade or business” within the meaning of the Internal Revenue Code.[1]

In October 2012,...
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