Mr. Zorn explained that although the court emphasized that its decision was based on the specific facts of the case, “If the principles of this case were applied to other PE funds that had sufficient ownership in a portfolio company, the investing funds could be liable for the ERISA pension liabilities of that portfolio company.” He added, “This will provide a lot more reason for PE funds to pay close attention to those situations where there are likely to be pension liabilities in the portfolio companies in which they invest.”
Commenting on another element of the opinion, Mr. Zorn explained, “The court seemed to acknowledge that investing funds are free to structure their investments in a way that minimized this risk of exposing the fund to pension liabilities, which is obviously good news for PE investors.”
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