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Employer Exempt from Withdrawal Liability

The Seventh Circuit Court of Appeals upheld an arbitrator?ÇÖs decision that Georgia-Pacific?ÇÖs withdrawal from the Central States, Southeast and Southwest Areas Pension Fund was ?Ç£solely?Ç¥ because of its arms-length sale of assets to a third party, where the purchaser assumed liability for the plan?ÇÖs contributions and posted a bond to ensure payment. In one of the first appellate court decisions to interpret the phrase ?Ç£solely because?Ç¥ in 29 U.S.C. ?º1384 (ERISA ?º4204), the Court stated that ?Ç£. . .the best understanding of this phrase is one that concentrates on the transaction at issue: If the sale had not occurred, everything else has remained the same, and no withdrawal liability would have accrued, then the sale to a buyer that continues the pension contributions does not entail withdrawal liability.?Ç¥ The Court cautioned that if an employer completes its withdrawal in stages, with a sale being the last step, then all transactions may be consolidated and withdrawal liability assessed looking at all stages as a whole. Central States, Southeast and Southwest Areas Pension Fund v. Georgia-Pacific, LLC, No. 09 C 1445, (7th Cir. Mar. 29, 2011).

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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April 2011
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