Successor employer

[Guest mparker2028]

Corporation (5 owners with equal ownership)sponsoring a Simple 401k is dissolving as of 12/31/06 and forming two separate entities 1/1/07 (one with 3 previous owners and the other with 2 previous owners).

The new entities will not be affiliated - they are 'breaking up'

The owners are trying to figure out how to handle existing plan going forward.

Each new entity will take half of the old company's employees with it.

Can either of these plans establish a new 401k plan effective 1/1/07 or do we have successor plan problems?