[Federal Register Volume 75, Number 248 (Tuesday, December 28, 2010)]
[Notices]
[Pages 81675-81677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32528]
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PENSION BENEFIT GUARANTY CORPORATION
Approval of 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 approval.
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SUMMARY: The Pension Benefit Guaranty Corporation has granted 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 Pension Plan. A notice of the request for exemption
from the requirement was published on September 3, 2010. The effect of
this
[[Page 81676]]
notice is to advise the public of the decision on the exemption
request.
ADDRESSES: Copies of public comments are available on PBGC's Web site,
http://www.pbgc.gov. Copies of the comments may be obtained by writing
PBGC's Communications and Public Affairs Department (CPAD) at Suite
240, 1200 K Street, NW., Washington, DC 20005-4026, or by visiting or
calling CPAD during normal business hours (202-326-4040).
FOR FURTHER INFORMATION CONTACT: Theresa Anderson, Office of the Chief
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 20005-4026; telephone 202-326-4020. (For TTY/TDD 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 the 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, in an amount 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 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.
Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty
Corporation (``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 sales rules be administered
in a manner that assures protection of the plan with the least
practicable intrusion into normal business transactions. 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 an exemption or variance from
the bond/escrow requirement does not constitute a finding by the PBGC
that a particular transaction satisfies the other requirements of
section 4204(a)(1).
Under the PBGC's regulation on variances for sales of assets (29
CFR part 4204), a request for a variance or waiver of the bond/escrow
requirement under any of the tests established in the regulation
(Sec. Sec. 4204.12 & 4204.13) is to be made to the plan in question.
The PBGC will consider waiver requests only when the request is not
based on satisfaction of one of the three regulatory tests 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) of the Freedom of Information Act.
Under section 4204.22 of the regulation, the 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 section 4204.22(b) of the regulation
require the 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 PBGC received no comments on the request for
exemption.
The Decision
On September 3, 2010, the PBGC published a notice of the pendency
of a request by Ricketts Acquisition LLC (the ``Buyer'') for an
exemption from the bond/escrow requirement of section 4204(a)(1)(B)
with respect to its purchase of the Chicago Cubs from the Chicago
National League Ball Club, LLC (the ``Seller''). According to the
request, the Major League Baseball Players Pension Plan (the ``Plan'')
was established and is maintained pursuant to a collective bargaining
agreement between the professional major league baseball teams (the
``Clubs'') and the Major League Baseball Players Association (the
``Players Association'').
According to the Buyer's representations, the Seller was obligated
to contribute to the Plan for certain employees of the sold operations.
Effective October 13, 2009, the Buyer and Seller entered into an
agreement under which the Buyer agreed to purchase substantially all of
the assets and assume substantially all of the liabilities of the
Seller relating to the business of employing employees under the Plan.
The Buyer agreed to contribute to the Plan for substantially the same
number of contribution base units as the Seller. The Seller agreed to
be secondarily liable for any withdrawal liability it would have had
with respect to the sold operations (if not for section 4204) should
the Buyer withdraw from the Plan within the five plan years following
the sale and fail to pay its withdrawal liability. The amount of the
bond/escrow required under section 4204(a)(1)(B) of ERISA is
$4,068,868. The estimated amount of the unfunded vested benefits
allocable to the Seller with respect to the operations subject to the
sale is $34,030,359. While the separate major league clubs are the
nominal contributing employers to the Plan, the Major League Central
Fund under the Office of the Commissioner receives the revenues and
makes the payments for certain common expenses, including each club's
contribution to the Plan. In support of the waiver request, the
requester asserts that: ``The Plan is funded from the 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
[[Page 81677]]
request would not significantly increase the risk of financial loss to
the Plan.''
Based on the facts of this case and the representations and
statements made in connection with the request for an exemption, the
PBGC has determined that an exemption from the bond/escrow requirement
is warranted, in that it would more effectively carry out the purposes
of Title IV of ERISA and would not significantly increase the risk of
financial loss to the Plan. Therefore, the PBGC hereby grants the
request for an exemption for the bond/escrow requirement. The granting
of an exemption or variance from the bond/escrow requirement of section
4204(a)(1)(B) does not constitute a finding by the PBGC that the
transaction satisfies the other requirements of section 4204(a)(1). The
determination of whether the transaction satisfies such other
requirements is a determination to be made by the Plan sponsor.
Issued at Washington, DC, December 12, 2010.
Joshua Gotbaum,
Director.
[FR Doc. 2010-32528 Filed 12-27-10; 8:45 am]
BILLING CODE 7708-01-P