Ruling Against Sun Capital Could Have Wider Private Equity Impact
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Ruling Against Sun Capital Could Have Wider Private Equity Impact
By Gregory Roth
In a court case that could add a new risk factor to some private equity deals, the First Circuit Court of Appeals last month ruled in favor of the New England Teamsters and Trucking Industry Pension Fund, which argued that two investment funds managed by Sun Capital Partners were liable for $4.5 million in pension liabilities for Scott Brass Inc. The Sun Capital portfolio company went bankrupt in 2008.
The ruling dials up the potential risks for sponsors contemplating buying companies with employee pension obligations. Experts said the ruling could lower the price of some deals, and lead some firms to steer clear of troubled companies that have pension obligations, even if they are the only potential suitors willing to try and rescue them.
