| 81-19 |
| July 1, 1981 |
| REFERENCE: |
| 4001(b) Definitions. Employer and Controlled Group |
| 4203 Complete Withdrawal |
| 4204 Sale of Assets |
| 4225 Limitation on Withdrawal Liability |
| OPINION: |
| This is in response to your letter requesting general guidance concerning the potential withdrawal liability under the |
| Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") of a construction contractor who sells a trade or business |
| in the construction industry. |
| Your first two questions appear to relate to the applicability of the "sale of assets exception" in Section 4204 to the |
| construction industry complete withdrawal provisions of Section 4203(b) and to the limitations on withdrawal liability in |
| Section 4225. You pose the case of a construction contractor contributing to a construction industry plan who makes an |
| arms-length sale of all the assets of the business. We assume that the seller is not under common control with any other |
| trades or businesses under Section 4001(b) of ERISA. |
| In the case of a construction industry plan, a complete withdrawal occurs, per ERISA Section 4203(b)(2), if: |
| "(A) an employer ceases to have an obligation to contribute under the plan, and |
| "(B) the employer -- |
| "(i) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions |
| were previously required, or |
| "(ii) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does |
| not renew the obligation at the time of the resumption. |
| In the case that you have presented, it appears that after the sale of the assets of the business the seller would not |
| continue to perform work in the jurisdiction of the collective bargaining agreement, so that there would not be a complete |
| withdrawal under Section 4203. Since there is no withdrawal under Section 4203, there is no need to consider the |
| application of Section 4204 or Section 4225. |
| Your final inquiry is whether our answer would be different if the seller owned two companies in a controlled group |
| relationship and sold one of them. We assume that one company would be in the construction industry, but you have not |
| supplied us with facts concerning the business of the other company or its relation to the construction industry plan. |
| Accordingly, we do not have sufficient information to respond. |
| I hope we have been of assistance. |
| Henry Rose |
| General Counsel |