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Is it an Asset Sale or a Stock Sale for Title IV Purposes - You Make t


Guest ERISAGuy
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Guest ERISAGuy

A client is selling the stock of its wholly owned subsidiary to an unrelated buyer in an arms length transaction. They are both electing to make a 338(h) election under the IRC to deem the sale to be an asset sale for tax purposes. The wholly owned subsidiary contributes to a multi-employer pension plan. Will this transaction be treated as a stock sale or an asset sale for purposes of determining whether withdrawal liability is triggered as a result of the sale? Has any legal guidance been issued on this issue?

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Guest ERISAGuy

I would think that the PBGC would clearly want to classify this transaction as an Asset Sale because of the additional protections to the Plan with the bonding requirement, etc. But, ERISA does not address this sort of sale - so I am not sure that ERISA would preempt state law because there is nothing in ERISA (at least which I can find) which can preempt the state law. Any other ideas or suggestions of where to look? Thank you. Any help will be greatly appreciated.

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Guest ERISAGuy

Kirk:

That wasn't my point totally - and of course I do agree with you - I understand that ERISA will preempt state law - but are you saying that basically we are subject to the PBGC's (or the DOL's) interpretation (whatever it may be) even if there is a lack of authority out there? Which way would you come out on the question?

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