More Egregious Aggregation Under ERISA in the Sun Capital Partners Case? The District Court Goes Down Yet Another Road

May 27, 2016

The recent opinion by the U.S. District Court for the District of Massachusetts on remand from the U.S. Court of Appeals for the First Circuit in the Sun Capital Partners case may be troubling to private equity funds and other investment funds that invest in portfolio companies with significant liabilities under the Employee Retirement Income Security Act of 1974 (“ERISA”). As we previously discussed in a 2013 OnPoint, under the First Circuit’s decision in 2013, an investment fund that owns 80% or more of a portfolio company may effectively be aggregated with the portfolio company for ERISA purposes and share its ERISA liabilities, depending on whether the fund is considered a “trade or business” based on the relevant facts and circumstances.

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