The court’s conclusion that the funds were involved in a trade or business hinged on (i) the active management of the fund’s portfolio company by the fund’s general partner and (ii) the economic benefit realized by the fund as a result of management fees paid to the general partner. The Court focused on the direct and indirect active involvement in the portfolio company’s operation and management. Further, the Court identified the direct economic benefit realized by the fund that an ordinary, passive investor would not generally derive — management fees. The court did not determine whether the Sun Capital funds were under common control.
Appeals Court Finds Private Equity Fund Constitutes a “Trade or Business” for Multiemployer Plan Withdrawal Liability Purposes
© 2024 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.