# Pendency of Request for Exemption From the Bond/Escrow Requirement Relating to the Sale of Assets by an Employer That Contributes to a Multiemployer Plan; San Francisco Baseball Associates, L.P. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-8994 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** April 14, 1994 ## Text PENSION BENEFIT GUARANTY CORPORATION Pendency of Request for Exemption From the Bond/Escrow Requirement Relating to the Sale of Assets by an Employer That Contributes to a Multiemployer Plan; San Francisco Baseball Associates, L.P. AGENCY: Pension Benefit Guaranty Corporation. ACTION: Notice of pendency of request. ----------------------------------------------------------------------- SUMMARY: This notice advises interested persons that the Pension Benefit Guaranty Corporation has received a request from the San Francisco Baseball Associates, L.P. 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 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 May 31, 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: D. Bruce Campbell, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-4026; telephone 202-326-4125 (202-326-4179 for TTY and TDD). These are not toll-free numbers. 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 2643), a request for a variance or waiver of the bond/escrow requirement under any of the tests established in the regulation (Secs. 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 Sec. 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 San Francisco Baseball Associates, L.P. (the ``Buyer'') for an exemption from the bond/escrow requirement of section 4204(a)(1)(B) with respect to its purchase of the San Francisco Giants (the ``Seller'') on November 20, 1992. In 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 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 revenues from World Series, League Championships, intradivision play-offs and All-Star games, and (iii) certain other radio and television revenues, including revenues from foreign broadcasts, of regular and exhibition games. 4. During the 1992 Plan year, approximately $34.1 million was paid into the Plan on behalf of all major league clubs. In that year revenues to the Central Fund exceeded expenses, including contributions to the Plan, by approximately $354 million. 5. The amount of the bond/escrow required under section 4204 (a)(1)(B) of ERISA is $1,412,077, and the estimated amount of the withdrawal liability that the Seller would incur if not for section 4204 is $4,796,483. 6. The contract of sale between the Buyer and the Seller was effective November 20, 1992, and the final closing occurred on January 14, 1993. 7. The contract of sale provides that the Buyer agrees ``to contribute to the Plan substantially the same number of contribution base units which the Seller had an obligation to contribute to the Plan.'' 8. The contract of sale further provides that ``[i]f the Buyer thereafter, but prior to the end of the fifth plan year commencing after the closing, partially or completely withdraws from the Plan, the Seller will be secondarily liable for any withdrawal liability it would have had to the Plan * * *.'' 9. In support of the waiver request, the requestor asserts that: ``[B]ecause 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, the Plan enjoys adequate security * * *. A change in ownership of an Employer does not in any way affect the obligation to fund the Plan * * * nor create the possibility that there will be difficulty in collecting Plan contributions due from any new owner * * *.'' 10. A complete copy of the non-confidential portions of the request has been sent to the Plan and the Union by certified mail, return receipt requested. 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 7th day of April 1994. Martin Slate, Executive Director. [FR Doc. 94-8994 Filed 4-13-94; 8:45 am] BILLING CODE 7708-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-8994. Public record. Not legal advice.