• Court Rejects PBGC Position That an Investment Fund Is Part of a Controlled Group for Purposes of Pension Liabilities of a Portfolio Company
  • February 11, 2013
  • Law Firm: Mayer Brown LLP - Chicago Office
  • Late in 2012, in Sun Capital Partners v. New England Teamsters (“Sun Capital”), a federal district court in Massachusetts (the “District Court”) held that certain private equity funds were not trades or businesses that could be held jointly and severally liable for the pension obligations of a portfolio company in which such funds had invested. In so holding, the District Court rejected a 2007 ruling of the Appeals Board of the US Pension Benefit Guaranty Corporation (“PBGC”) that a private equity fund was engaged in a trade or business and, therefore, a member of one of its portfolio companies’ controlled group for purposes of pension liabilities to the PBGC. The District Court’s decision in the Sun Capital case was also a departure from a 2010 Michigan district court decision that examined similar facts and issues and found the PBGC Appeals Board’s reasoning persuasive.