Private-Equity Funds Beware: How You Could Be Exposed to Pension Liability after Sun Capital
Bankruptcy and Restructuring Partner Adam H. Isenberg and Associate Monique Bair DiSabatino published this article discussing a new risk private equity investors face in regards to liability for the unfunded withdrawal obligations of their debtor/portfolio companies. The First Circuit Court of Appeals’ decision in Sun Capital marked the first occasion that a federal appellate court has addressed the treatment of a private equity fund as a “trade or business” under ERISA, which may have significant implications for private equity funds. In light of this decision, the authors suggest that private equity funds evaluate their portfolios to assess their risk of present and future exposure to the unfunded benefit obligations of portfolio companies.
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