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Enforcement of security in insolvency

Usual Luxembourg security package

Luxembourg is one of the leading domiciles worldwide for international investment portfolio acquisition vehicles.

Acquisition financing are usually secured against the assets and cash flows of the target company as well as of the buyout vehicle.

In practice, given that a Luxembourg holding company generally does not have any operational activities, shares, receivables and cash on bank are the most important assets to cover.

Luxembourg, Insolvency & Restructuring, Ogier, Due diligence
First Circuit finds that a private equity fund can be liable for the pension obligations of its portfolio company

In Sun Capital Partners III, L.P. et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312, 2013 WL 3814985 (1st Cir. July 24, 2013), the First Circuit held that a private equity fund could be liable for its bankrupt portfolio company’s withdrawal liability imposed under Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) on the basis of the private equity fund constituting a “trade or business” under ERISA’s controlled group rules.

USA, Corporate Finance/M&A, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Sheppard Mullin Richter & Hampton LLP, Bankruptcy, Employee Retirement Income Security Act 1974 (USA), Liability (financial accounting), Sun Capital Partners, Pension Benefit Guaranty Corporation, First Circuit