withdrawal liability Withdrawal Liability if selling company and keeping Union workers

[Don]

Our company is considering selling to a buyer that will continue to use the Union workers and continue paying into all Union Benefit plans.  Can the company (current shareholder) sell it's shares to this buyer without liability to ERISA's Pension program involving "Withdrawal Liability"?  The company has been incorporated for many years.  Thank you - Don

[Brian Haynes]

As a general rule, shares of stock can be sold to a buyer without triggering withdrawal liability.  This is considered a mere corporate change and does not result in liability provided the corporation remains obligated to contribute to the pension fund.  If the sale of stock is consummated with a principal purpose to evade or avoid withdrawal liability, the pension fund can argue under Section 4212(c) of ERISA that the transaction was an asset sale that results in withdrawal liability.  There are a number of cases under Section 4212(c) that involve stock sales.  Check your Collective Bargaining Agreement and any Participation Agreement with the pension fund to determine what the notification obligations are regarding the sale.