[Federal Register Volume 75, Number 171 (Friday, September 3, 2010)]
[Notices]
[Pages 54191-54192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22012]
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PENSION BENEFIT GUARANTY CORPORATION
Pendency of Request for Exemption From the Bond/Escrow
Requirement Relating to the Sale of Assets by an Employer Who
Contributes to a Multiemployer Plan: Ricketts Acquisition LLC and the
Chicago National League Ball Club, LLC
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of pendency of request.
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SUMMARY: This notice advises interested persons that the Pension
Benefit Guaranty Corporation (``PBGC'') has received a request from
Ricketts Acquisition LLC for an exemption from the bond/escrow
requirement of section 4204(a)(1)(B) of the Employee Retirement Income
Security Act of 1974, as amended, with respect to the Major League
Baseball Players Benefit Plan. Section 4204(a)(1) provides that the
sale of assets by an employer that contributes to a multiemployer
pension plan will not constitute a complete or partial withdrawal from
the plan if the transaction meets certain conditions. One of these
conditions is that the purchaser post a bond or deposit money in escrow
for the five-plan-year period beginning after the sale. PBGC is
authorized to grant individual and class exemptions from this
requirement. Before granting an exemption, the statute and PBGC
regulations require PBGC to give interested persons an opportunity to
comment on the exemption request. The purpose of this notice is to
advise interested persons of the exemption request and solicit their
views on it.
DATES: Comments must be submitted on or before October 18, 2010.
ADDRESSES: Comments may be submitted by any off the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the Web site instructions for submitting comments.
E-mail: [email protected].
Fax: 202-326-4224.
Mail or Hand Delivery: Legislative and Regulatory
Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 20005-4026.
Comments received, including personal information provided, will be
posted to http://www.pbgc.gov. Copies of comments may also be obtained
by writing to Disclosure Division, Office of General Counsel, Pension
Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-
4026, or calling 202-326-4040 during normal business hours. (TTY and
TDD users may call the Federal relay service toll-free at 1-800-877-
8339 and ask to be connected to 202-326-4040.)
FOR FURTHER INFORMATION CONTACT: Eric Field, Attorney, Office of the
Chief Counsel, Suite 340, 1200 K Street, NW., Washington, DC 20005-
4026, 202-326-4020. (For TTY/TTD users, call the Federal relay service
toll free at 1-800-877-8339 and ask to be connected to 202-326-4020.)
SUPPLEMENTARY INFORMATION:
Background
Section 4204 of the Employee Retirement Income Security Act of
1974, as amended by the Multiemployer Pension Plan Amendments Act of
1980 (``ERISA'' or the ``Act''), provides that a bona fide arm's length
sale of assets of a contributing employer to an unrelated party will
not be considered a withdrawal if three conditions are met. These
conditions, enumerated in section 4204(a)(1)(A)-(C) are that:
(A) The purchaser has an obligation to contribute to the plan with
respect to covered operations for substantially the same number of
contribution base units for which the seller was obligated to
contribute;
(B) The purchaser obtains a bond or places an amount in escrow, for
a period of five plan years after the sale, equal to the greater of the
seller's average required annual contribution to the plan for the three
plan years preceding the year in which the sale occurred or the
seller's required annual contribution for the plan year preceding the
year in which the sale occurred (the amount of the bond or escrow is
doubled if the plan is in reorganization in the year in which the sale
occurred); and
(C) The contract of sale provides that if the purchaser withdraws
from the plan within the first five plan years beginning after the sale
and fails to pay any of its liability to the plan, the seller shall be
secondarily liable for the liability it (the seller) would have had but
for the relief afforded under section 4204.
The bond or escrow described above would be paid to the plan if the
purchaser withdraws from the plan or fails to make any required
contributions to the plan within the first five plan years beginning
after the sale. Additionally, section 4204(b)(1) provides that if a
sale of assets is covered by section 4204, the purchaser assumes by
operation of law the contribution record of the seller for the plan
year in which the sale occurred and the preceding four plan years.
[[Page 54192]]
Section 4204(c) of ERISA authorizes the PBGC to grant individual or
class variances or exemptions from the purchaser's bond/escrow
requirement of section 4204(a)(1)(B) when warranted. The legislative
history of section 4204 indicates a Congressional intent that the
statute be administered in a manner that assures protection of the plan
with the least intrusion into normal business transactions practicable.
Senate Committee on Labor and Human Resources, 96th Cong., 2nd Sess.,
S. 1076, The Multiemployer Pension Plan Amendments Act of 1980: Summary
and Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong.
Rec. S10117 (July 29, 1980). The granting of a variance or exemption
from the bond/escrow requirement does not constitute a finding by PBGC
that a particular transaction satisfies the other requirements of
section 4204(a)(1).
Under PBGC's regulation on variances for sales of assets (29 CFR
part 4204), a request for a variance or exemption from the bond/escrow
requirement under any of the tests established in the regulation
(Sec. Sec. 4204.12 and 4204.13) is to be made to the plan in question.
PBGC will consider variance or exemption requests only when the request
is not based on satisfaction of one of the four regulatory tests under
regulation Sec. Sec. 4204.12 and 4204.13, or when the parties assert
that the financial information necessary to show satisfaction of one of
the regulatory tests is privileged or confidential financial
information within the meaning of 5 U.S.C. 552(b)(4) (Freedom of
Information Act). See 29 CFR 4204.21.
Under Sec. 4204.22 of the regulation, PBGC shall approve a request
for a variance or exemption if it determines that approval of the
request is warranted, in that it:
(1) Would more effectively or equitably carry out the purposes of
Title IV of the Act; and
(2) Would not significantly increase the risk of financial loss to
the plan.
Section 4204(c) of ERISA and Sec. 4204.22(b) of the regulation
requires PBGC to publish a notice of the pendency of a request for a
variance or exemption in the Federal Register, and to provide
interested parties with an opportunity to comment on the proposed
variance or exemption.
The Request
PBGC has received a request, dated November 25, 2009, from Ricketts
Acquisition LLC (the ``Purchaser'') for an exemption from the bond/
escrow requirement of section 4204(a)(1)(B) with respect to its
purchase of the Chicago National League Ball Club, LLC (the
``Seller''). In the request, the Purchaser represents, among other
things, that:
1. The Seller was obligated to contribute to the Major League
Baseball Players Benefit Plan (the ``Plan'') for certain employees of
the purchased operations.
2. The Purchaser has agreed to assume the obligation to contribute
to the Plan for substantially the same number of contribution base
units as the Seller.
3. The Seller has agreed to be secondarily liable for any
withdrawal liability it would have had with respect to the purchased
operations (if not for section 4204) should the Purchaser withdraw from
the Plan and fail to pay its withdrawal liability.
4. The estimated amount of the withdrawal liability of the Seller
with respect to the operations subject to the sale is $34,030,359.
5. The amount of the bond/escrow established under section
4204(a)(1)(B) is $4,068,868, which is to be posted if PBGC has not
acted on the request by the end of the plan year of the request.
6. The Major League Baseball Clubs (the ``Clubs'') have established
the Major League Central Fund (the ``Central Fund'') pursuant to the
Major League Baseball Constitution. Under this Constitution, the Office
of the Commissioner of Baseball pays contributions to the Plan from the
Central Fund on behalf of each participating employer in satisfaction
of the employer's pension liability under the Plan's funding agreement.
The monies in the Central Fund are derived directly from (i) gate
receipts from All-Star games; (ii) radio and television revenue from
World Series, League Championship Series, Division Series, All-Star
Games, and (iii) certain other radio and television revenue, including
revenues from foreign broadcasts, regular, spring training, and
exhibition games (``Revenues'').
7. In support of the exemption request, the Purchaser asserts that
``[t]he Plan is funded directly from Revenues which are paid from the
Central Fund directly to the Plan without passing through the hands of
any of the Clubs. Therefore, the Plan enjoys a substantial degree of
security with respect to contributions on behalf of the Clubs. A change
in ownership of a particular Club does not affect the obligation of the
Central Fund to fund the Plan out of the Revenues. As such, approval of
this exemption request would not increase the risk of financial loss to
the Plan.''
8. A complete copy of the request was sent to the Plan and to the
Major League Baseball Players Association by certified mail, return
receipt requested.
Issued at Washington, DC, August 27, 2010.
Joshua Gotbaum,
Director.
[FR Doc. 2010-22012 Filed 9-2-10; 8:45 am]
BILLING CODE 7708-01-P