The U.S. Court of Appeals for the First Circuit recently ruled that a private equity fund can be held liable for the pension obligations of a portfolio company in its decision in Sun Capital Partners III LP v. New England Teamsters & Trucking Industry Pension Fund.

Although this ruling focuses only on who might be responsible for the liabilities of underfunded pension plans, it should be looked to as a potential opportunity to maximize value from portfolio companies while also mitigating future risk.  Given the magnitude of retirement liabilities in the U.S. and continued headlines about retirement plan problems, general partners may find themselves under intense scrutiny for their involvement, with potential liability for the employee benefit plans of their portfolio companies.

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.