It’s not Always Sunny in Private Equity: Analysis and Impact of the First Circuit’s Sun Capital Decision
Mark J. DeLuca. Private equity funds in the U.S. are known for generating large profits and, consequently, making fund managers extremely wealthy. But is the sun now beginning to set on this this level of profitability? For the first time, a court has determined that a private equity fund was engaged in a “trade or business” for purposes of the Multiemployer Pension Plan Amendments Act (“MPPAA”). In the eyes of pension funds and the Pension Benefit Guaranty Corporation (“PBGC”), both of whom want to reach deep pockets to ensure that employee pension benefits are paid in full, this is a significant step in the right direction. The door has now been opened, at least in the First Circuit, for pension funds to go after private equity investors when seeking to recover from companies that withdraw from multiemployer pension plans. This is…