410(b)(6)(C) transition relief

Company B was acquired by Company A in an asset sale.     During the acquisition, Company A created a new Company, named it Company C (different and distinct EIN from company A) and this is the company now paying the former employees of Company B.

Company B previously sponsored a plan and intends to terminate it. 

Company C would like to establish a new plan for its employees only and want to rely on 410(b)(6)(C) transition relief.  All the documents I have read on this issue talk about the current existence of a Plan and that Plan having met coverage prior to the transaction, thus the ability to reply on the 410(b)(6(c) rules.   But no plan existed for this new company. So I don't think that the client can rely on the 410(b)(6)(C) transition relief.    Is my logic correct?

Any guidance that can be provided would be greatly appreciated.

Consider these additional questions:

Does Company C plan just cover Company B employees?

Is Company C plan providing the same benefit as the Company B plan, or are the benefits different?

Have you looked at the QSLOB rules? Particularly Treas Reg 1.414(r)-5(d)?

Yes, the intent is just to cover the former Company B employees.  

Yes, the client provided the document for the Company B plan and asked that the provisions mirror that plan.

QSLOB rules would not apply as both companies are in the same line of business.

If it were me, I would have employer C adopt employer B's plan as an adopting employer, and not bother with old plan, new plan, and then transfer plan sponsorship. No mess, no reason for the regulators to think there was an actual new plan. (Because there really isn't)

By the way, Treas Reg 1.414(r)-5(d) applies when the employers are in the same line of business, but everything is happening due to corporate transaction. It's a pathwy to dealing with merger situations where there are some changes to benefits that would not be allowable under 401(b)(6)(C).