[Federal Register Volume 59, Number 80 (Tuesday, April 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10068]
[[Page Unknown]]
[Federal Register: April 26, 1994]
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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; Home Team Limited Partnership
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 has received a request from The Home Team
Limited Partnership 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
result in a complete or partial withdrawal from the plan if certain
conditions are met. 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. The PBGC is authorized to grant individual
and class exemptions from this requirement. Before granting an
exemption the PBGC is required 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 June 10, 1994.
ADDRESSES: All written comments (at least three copies) should be
addressed to: Pension Benefit Guaranty Corporation, Office of the
General Counsel, 1200 K Street, NW., Washington, DC 20005-4026, or
hand-delivered to suite 340 at the above address between 9 a.m. and 4
p.m., Monday through Friday. The non-confidential portions of the
request for an exemption and the comments received will be available
for public inspection at the PBGC Communications and Public Affairs
Department, suite 240, at the above address, between the hours of 9
a.m. and 4 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT: Karen L. Morris, Office of the General
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 2005-4026; telephone 202-326-4127 (202-326-4179 for TTY
and TDD). These are not toll-free numbers.
SUPPLEMENTARY INFORMATION:
Background
Section 4202 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 if (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)91). Such questions are to be decided by the plan
sponsor in the first instance, and any disputes are to be resolved in
arbitration. 29 U.S.C. 1382, 1399, 1401.
Under the PBGC's regulation on variances for sales of assets (29
CFR part 2643), a request for a variance or waiver of the bond/escrow
requirement under any of the tests established in the regulation (29
CFR 2643.12-2643.14) 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 four 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) (the Freedom of
Information Act).
Under section 2643.3 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 Sec. 2643.3(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 Request
The PBGC has received a request from The Home Team Limited
Partnership (``the Buyer'') for an exemption from the bond/escrow
requirement of section 4204(a)(1)(B) with respect to its purchase of
The Orioles, Inc. (``the Seller'') on October 4, 1993. In support of
the request, the Buyer represents among other things that:
1. The Major League Baseball Players Benefit Plan (the ``Plan'')
was established and is maintained pursuant to a collective bargaining
agreement between professional major league baseball teams and the
Major League Baseball Players Association.
2. The Seller was a participating employer in the Plan.
3. The major league clubs have established the Major Leagues
Central Fund (the ``Central Fund'') pursuant to the ``Major League
Agreement in re Major Leagues Central Fund.'' Under this agreement,
contributions to the Plan for all participating employers are paid by
the Office of the Commissioner of Baseball from the Central Fund on
behalf of each participating employer in satisfaction of the employer's
contribution obligation arising 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 revenues from World
Series, League Championships, intradivision play-offs and All-Star
games, and (iii) certain other radio and television revenues from
regular and exhibition games, including revenues from foreign
broadcasts.
4. For the Plan year ended March 31, 1993, the Central Fund
contributed approximately $34.1 million to the Plan on behalf of the
Clubs; 1/26 of that amount represented contributions paid on behalf of
the Seller.
5. The Buyer and the Seller entered into an Asset Purchase
Agreement for the Buyer to purchase substantially all of the assets and
assume substantially all of the liabilities of the Seller relating to
the business employing the employees covered by the Plan. The final
closing of the transaction occurred on October 4, 1993 (the
``Closing'').
6. Under the Asset Purchase Agreement, the Buyer assumed the
obligation to contribute to the Plan for substantially the same number
of contribution base units as the Seller was obligated to contribute to
the Plan.
7. The Asset Purchase Agreement further provided that:
[I]f the Buyer thereafter, but prior to the end of the fifth
plan year commencing after Closing, partially or completely
withdraws from the Plan, Seller shall be and remain secondarily
liable for any withdrawal liability it would have had to the Plan
but for the operation of ERISA section 4204.
8. The amount of the bond/escrow that would be required under
section 4204 (a)(1)(B) of ERISA beginning as of April 1, 1994, is
$1,401,449, and the estimated amount of the withdrawal liability that
the Seller would incur if not for section 4204 is $7,672,235.
9. In support of the waiver request the Buyer states that:
The Plan is funded directly from the Revenues which are paid
from the Central Fund directly to the [Plan's] Trust without first
passing through the hands of any of the Employers. Therefore, the
Plan enjoys a substantial degree of security . . . . A change in
ownership of an Employer does not affect the obligation . . . to
fund the Plan . . . . Nor does a change in ownership in any way
create the possibility that there will be difficulty in collecting
Plan contributions due from any new Employer.
10. The Buyer has sent by certified mail, return receipt requested,
a complete copy of the request to the Plan and the collective
bargaining representative.
Comments
All interested persons are invited to submit written comments on
the pending exemption request to the above address. All comments will
be made a part of the record. Comments received, as well as the
relevant non-confidential information submitted in support of the
request, will be available for public inspection at the address set
forth above.
Issued at Washington, DC, on this 20th day of April, 1994.
Martin Slate,
Executive Director.
[FR Doc. 94-10068 Filed 4-25-94; 8:45 am]
BILLING CODE 7708-01-M
