Eleven years after its portfolio company’s bankruptcy triggered a multiemployer pension plan’s demand that funds sponsored by private equity firm Sun Capital Advisors, Inc. (“Sun Capital”) pay the portfolio company’s $4.5 million ERISA withdrawal liability, Sun Capital has won a long-sought victory. On November 22, 2019, a three-judge panel of the First Circuit held that two Sun Capital funds were not required to pay for the withdrawal liability of Scott Brass Inc. (“Scott Brass”). While the decision represents a meaningful victory for Sun Capital, individually, it is unlikely to end attempts by the Pension Benefit Guaranty Corporation (“PBGC”) and multiemployer plans (many of which remain severely underfunded) to seek payment from private equity funds for unpaid pension liabilities of their portfolio companies. Private equity sponsors should continue to focus on potential joint and several liability concerns when structuring investments in companies that participate in defined benefit pension plans.

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