OGC Opinion Letter

79-9

May 7, 1979

REFERENCE:

4022 Benefits Guaranteed

4042 Termination by PBGC

4042(b) Termination by PBGC. Appointment of Trustee

4042(d) Termination by PBGC. Powers of Trustee

OPINION:

I am answering your correspondence regarding the proposed assignment of a claim filed * * * against * * * to the Pension

Benefit Guaranty Corporation (the "PBGC"). The claim is one for unpaid employer contributions to the Plan and was filed in

* * * bankruptcy reorganization case referred to above.

We believe the PBGC, as plan trustee, is an appropriate party to press an assigned claim for unpaid employer

contributions, and the PBGC is willing to assume the claim of * * * Trust in accordance with Bankruptcy Rule 10-401(c).

Although the PBGC cannot guarantee that a court in bankruptcy will allow Trust's claim in full, if the claim is assigned, we

intend to prosecute the claim fully although we reserve the right to compromise or settle it.

It is our opinion that the claim of * * * Trust will not be impaired by an assignment to PBGC. Upon execution of the

proposed assignment, the PBGC will succeed to the position of * * * Trust on the claim and, as a common law assignee,

will rely primarily upon powers and remedies presently available to * * * Trust in order to prosecute the claim. Our brief

research indicates that a court in bankruptcy usually will fully allow a claim which has been transferred after

commencement of a reorganization case in the absence of fraud misrepresentation, or overreaching. 13A Collier on

* * * the reorganization trustee, may believe employer liability is the exclusive remedy available to the PBGC. However, it

is our view that § 4062 of the Employee Retirement Income Security Act of 1974 ("ERISA") does not affect our ability to

file a claim for unpaid employer contributions within the period permitted by a court or assert an assigned claim when the

PBGC serves as an ERISA trustee.

Although Congress intended the primary role of the PBGC to be as an insurer of guaranteed benefits, PBGC has an

additional role in this case as an ERISA trustee appointed pursuant to a court order of the Honorable Dick Yin Wang,

Bankruptcy Judge, on October 25, 1977. See ERISA § § 4022 and 4042.

ERISA trustees are appointed to administer plans which may be or have been terminated. Appointments are made either

by courts or agreements between the PBGC and plan administrators. See ERISA § § 4042(b) and (c). Anyone may be

appointed by the appropriate court as an ERISA trustee, but the PBGC may request that it be appointed in any case.

ERISA § 4042(b). Also see H.R. Rep. No. 93-1280, 93rd Cong., 2d. Sess. 373 (1974). However, there is nothing which

requires the PBGC be appointed.

The duties of an ERISA trustee are defined in § 4042 of ERISA and include those which Congress imposes upon trustees

in bankruptcy and are codified in the Bankruptcy Act § 47, 11 U.S.C. 75 (1976); ERISA § 4042(d)(3). One duty of a

bankruptcy trustee is to:

collect and reduce to money the property of the estates for which they are trustees, under the direction of the court, and

close up the estates as expeditiously as is compatible with the best interests of the parties in interest. 11 U.S.C. 75(a)(1).

The duties of an ERISA trustee also include those of a fiduciary. ERISA § 4042(d)(3). Fiduciary duties of care, skill, and

loyalty, may also compel an ERISA trustee to seek to collect past due contributions.

In order to carry out these duties, Congress granted several powers to ERISA trustees. Among these are the powers:

(i) to do any act authorized by the plan or (Title IV) to be done by the plan administrator or any trustee of the plan;

(ii) to require the transfer of all (or any part) of the assets . . . of the plan to himself as (an ERISA) trustee;

Congress also provided ERISA trustees with other relevant powers. Among these is the power:

(iii) to collect for the plan any amounts due the plan;

Congress did not limit the remedies available to an ERISA trustee when the PBGC serves in that capacity. The PBGC has

the same rights and remedies as others when it serves as an ERISA trustee because it bears the same fiduciary duties to

collect and liquidate plan property.

Moreover, as Congress empowered the PBGC to serve both as an insurer of guaranteed benefits and as an ERISA

trustee, I believe the district court's opinion in the Matter of Multiponics, at 436 F. Supp. 1065 (E.D. La. 1977), is

In your letter, you also asked us to clarify the relationship between PBGC and * * * Trust, and the relative functions of * *

* Trust under the Trust Agreement and PBGC under the order appointing it as an ERISA trustee. PBGC, as an ERISA

trustee, continues the services of the plan trustee in some cases, and PBGC understands that * * * Trust continues to

operate under the Trust Agreement, as amended, which it entered on September 30, 1962.

I have also redrafted the proposed assignment and consent order to incorporate several changes which were agreed to by

you and * * * of this Office during telephone conversations on May 1, 1979. In addition, I have signed both documents on

behalf of PBGC; please find them enclosed.

I hope this explanation of our position has been of assistance. * * * will be handling this matter and can be contacted by

telephone at * * * or at the above address.

Henry Rose

General Counsel