Approval of Exemption From the Bond/Escrow Requirement Relating to the Sale of Assets by an Employer That Contributes to a Multiemployer Plan: Marlins Holdings LLC and the Miami Marlins Major League Baseball Franchise, 55915-55916 [2018-24406]

Agencies

• Pension Benefit Guaranty Corporation

[Federal Register Volume 83, Number 217 (Thursday, November 8, 2018)]
[Notices]
[Pages 55915-55916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24406]


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PENSION BENEFIT GUARANTY CORPORATION


Approval of Exemption From the Bond/Escrow Requirement Relating 
to the Sale of Assets by an Employer That Contributes to a 
Multiemployer Plan: Marlins Holdings LLC and the Miami Marlins Major 
League Baseball Franchise

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of Approval.

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SUMMARY: The Pension Benefit Guaranty Corporation received a request 
from Marlins Holdings LLC for an exemption from the bond/escrow 
requirement relating to a sale of assets with respect to the Major 
League Baseball Players Pension Plan. PBGC published a notice of the 
request for exemption from the requirement. PBGC is now advising the 
public that the agency has granted the exemption request.

FOR FURTHER INFORMATION CONTACT: Bruce Perlin, Assistant General 
Counsel ([email protected]), 202-326-4020, ext. 6818, Jon 
Chatalian, Acting Assistant General Counsel ([email protected]), 
ext. 6757, or Mary A. Petrovic, Attorney ([email protected]), ext. 
4638, Office of the General Counsel, Suite 340, 1200 K Street NW, 
Washington, DC 20005-4026; (TTY users may call the Federal relay 
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4020.

SUPPLEMENTARY INFORMATION: 

Background

    Section 4204 of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980 (``ERISA'' or ``the Act''), provides that a bona fide arm's-length 
sale of assets of a contributing employer to an unrelated party will 
not be considered a withdrawal if three conditions are met. These 
conditions, enumerated in section 4204(a)(1)(A)-(C), are that:
    (A) The purchaser has an obligation to contribute to the plan with 
respect to the operations for substantially the same number of 
contribution base units for which the seller was obligated to 
contribute;
    (B) the purchaser obtains a bond or places an amount in escrow, for 
a period of five plan years after the sale, in an amount equal to the 
greater of the seller's average required annual contribution to the 
plan for the three plan years preceding the year in which the sale 
occurred or the seller's required annual contribution for the plan year

[[Page 55916]]

preceding the year in which the sale occurred (the amount of the bond 
or escrow is doubled if the plan is in reorganization in the year in 
which the sale occurred); and
    (C) the contract of sale provides that if the purchaser withdraws 
from the plan within the first five plan years beginning after the sale 
and fails to pay any of its liability to the plan, the seller shall be 
secondarily liable for the liability it (the seller) would have had but 
for section 4204.
    The bond or escrow described above would be paid to the plan if the 
purchaser withdraws from the plan or fails to make any required 
contributions to the plan within the first five plan years beginning 
after the sale. Additionally, section 4204(b)(1) provides that if a 
sale of assets is covered by section 4204, the purchaser assumes by 
operation of law the contribution record of the seller for the plan 
year in which the sale occurred and the preceding four plan years.
    Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty 
Corporation (``PBGC'') to grant individual or class variances or 
exemptions from the purchaser's bond/escrow requirement of section 
4204(a)(1)(B) when warranted. The legislative history of section 4204 
indicates a Congressional intent that the sales rules be administered 
in a manner that assures protection of the plan with the least 
practicable intrusion into normal business transactions. Senate 
Committee on Labor and Human Resources, 96th Cong., 2nd Sess., S. 1076, 
The Multiemployer Pension Plan Amendments Act of 1980: Summary and 
Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong. Rec. 
S10117 (July 29, 1980). The granting of an exemption or variance from 
the bond/escrow requirement does not constitute a finding by PBGC that 
a particular transaction satisfies the other requirements of section 
4204(a)(1).
    Under PBGC's regulation on variances for sales of assets (29 CFR 
part 4204), a request for a variance or waiver of the bond/escrow 
requirement under any of the tests established in the regulation 
(Sec. Sec.  4204.12 & 4204.13) is to be made to the plan in question. 
PBGC will consider waiver requests only when the request is not based 
on satisfaction of one of the three regulatory tests or when the 
parties assert that the financial information necessary to show 
satisfaction of one of the regulatory tests is privileged or 
confidential financial information within the meaning of 5 U.S.C. 
552(b)(4) of the Freedom of Information Act.
    Under Sec.  4204.22 of the regulation, PBGC shall approve a request 
for a variance or exemption if it determines that approval of the 
request is warranted, in that it: (1) Would more effectively or 
equitably carry out the purposes of Title IV of the Act; and (2) would 
not significantly increase the risk of financial loss to the plan.
    Section 4204(c) of ERISA and Sec.  4204.22(b) of the regulation 
require PBGC to publish a notice of the pendency of a request for a 
variance or exemption in the Federal Register, and to provide 
interested parties with an opportunity to comment on the proposed 
variance or exemption. PBGC received no comments on the request for 
exemption.

The Decision

    On June 6, 2018, PBGC published a notice of the pendency of a 
request by Marlins Holdings LLC (the ``Purchaser'') for an exemption 
from the bond/escrow requirement of section 4204(a)(1)(B) with respect 
to its purchase of the Miami Marlins Major League Baseball franchise 
from Miami Marlins, L.P., LLC (the ``Seller''). According to the 
request, the Purchaser represents among other things that:
    1. The Seller was obligated to contribute to the Major League 
Baseball Players Benefit Plan (the ``Plan'') for certain employees of 
the sold operations.
    2. The Purchaser has agreed to assume the obligation to contribute 
to the Plan for substantially the same number of contribution base 
units as the Seller.
    3. The Seller has agreed to be secondarily liable for any 
withdrawal liability it would have had with respect to the sold 
operations (if not for section 4204) should the Purchaser withdraw from 
the Plan and fail to pay its withdrawal liability.
    4. The estimated amount of the withdrawal liability of the Seller 
with respect to the operations subject to the sale is $19,169,342.
    5. The amount of the bond/escrow established under section 
4204(a)(1)(B) is $4,781,000.
    6. Major League Baseball has a unique structure in which the Plan 
is funded from the Major League Central Fund (the ``Central Fund''), 
maintained and administered by the Commissioner of Baseball. Under this 
structure, contributions to the Plan for all participating employers 
are paid by the Office of the Commissioner of Baseball from the Central 
Fund on behalf of each participating employer in satisfaction of the 
employer's pension liability under the Plan's funding agreement. The 
monies in the Central Fund are derived directly from common revenues 
related to the All-Star Game, post-season games, certain media rights 
and other common revenues (collectively, the ``Revenues'').
    7. In support of the exemption request, the requester asserts that, 
``the Plan is funded from the Central Fund that is maintained and 
administered by the Commissioner of Baseball.'' Major League Baseball 
pays contributions directly to the Plan from the Central Fund. Further, 
the requester asserts that, ``the Plan enjoys a substantial degree of 
security with respect to contributions on behalf of the Clubs. A change 
in ownership of a Club does not affect the obligation of the Central 
Fund to fund the Plan. As such, approval of this exemption request 
would not increase the risk of financial loss to the Plan.''
    8. A complete copy of the request was sent to the Plan and to the 
Major League Baseball Players Association by certified mail, return 
receipt requested.
    Based on the facts of this case and the representations and 
statements made in connection with the request for an exemption, PBGC 
has determined that an exemption from the bond/escrow requirement is 
warranted, in that it would more effectively carry out the purposes of 
title IV of ERISA and would not significantly increase the risk of 
financial loss to the Plan. Therefore, PBGC hereby grants the request 
for an exemption for the bond/escrow requirement. The granting of an 
exemption or variance from the bond/escrow requirement of section 
4204(a)(1)(B) does not constitute a finding by PBGC that the 
transaction satisfies the other requirements of section 4204(a)(1). The 
determination of whether the transaction satisfies such other 
requirements is a determination to be made by the Plan sponsor.

    Issued in Washington, DC.
William Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2018-24406 Filed 11-7-18; 8:45 am]
 BILLING CODE 7709-02-P