1st Circ. Ruling Clarifies PE Fund Pension Withdrawal Liability

Private Equity attorney Victoria Zerjav and Employee Benefits attorney Vania Aksentijevich break down an almost decade long battle that began in 2010 when the New England Teamsters and Trucking Industry Pension Fund’s multiemployer pension plan sued the Sun Capital funds for the unpaid withdrawal liability of their portfolio company, Scott Brass Inc. (SBI), after SBI filed for bankruptcy and withdrew from participation in the pension plan.

The First Circuit rejected the Sun Capital funds’ argument that the formation of a limited liability company to acquire SBI was evidence against an intent to form a partnership, the court agreed that the formation of a limited liability company both prevented the Sun Capital funds from conducting their business in their joint names and limited the manner in which they could exercise mutual control over and assume mutual responsibilities for managing SBI.

READ: 1st Circ. Ruling Clarifies PE Fund Pension Withdrawal Liability