The US Court of Appeals for the First Circuit recently ruled that two private equity funds can be held accountable in an employer's withdrawal from a pension plan. Investigations revealed that the private equity funds were owned by Sun Capital Advisors Inc. which had a stake in the employer's company. Scott Brass Inc., the employer, contributed to the New England Teamsters and Trucking Industry Pension Fund. It withdrew from the plan in 2008 before filing for bankruptcy. The withdrawal liability was pegged at more than USD 4.5 million.
The plan later learned that Sun Fund III and Sun Fund IV of Sun Capital Advisors Inc. had a 100 percent interest in Scott Brass Inc. The plan then filed a case to hold both private equity funds liable on the grounds that they were businesses under the control of the employer. At least one of the funds in question qualified as a trade under the Multiemployer Pension Plan Amendments Act, Chief Judge Sandra Lynch ruled.
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