Employer wants to "clean up" 350 defaulted participant loans

[Guest CJK]

A large plan recently recognized that it has 350 participant loans in default. Some defaults go back 4 years. None have been treated as a "deemed distribution" as of yet. Some of the defaults occurred because of employer payroll errors, such as the loan withholding from compensation was stopped prematurely, others due to confusion as to the proper handling of loans when a participant goes on disability, etc.The employer has made the decision to "clean up" the situation at this time and is looking for available alternatives. I know that the straight forward answer is to treat these outstanding loans as "deemed distributions." I have also heard of situations where the employer has made a "walk-in" CAP filing and has negotiated other possibilities. I am interested in whether any of the readers have had experience along these lines relative to a "walk-in" CAP in this situation. I would also be interested in learning of other solutions employers may have used in this situation regognizing that they may be on the more aggressive side.