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Arbitrator Reduced Withdrawal Liability Assessment

A multiemployer pension fund demanded approximately $4,640,000 in withdrawal liability from our client, a grocery store chain operating in several states. The withdrawal had been caused by a sale of the client’s assets in one state, while the client continued to do business in another. We pointed out to the fund that the sale had divested the client of its most valuable stores, and we asserted that a statutory reduction in withdrawal liability available for sale of substantially all of an employer’s assets should apply. Pursuant to our calculation, withdrawal liability should have been approximately $1.04 million, not $4.6 million. The fund rejected this claim, arguing that the reduction should not apply because the sale was to a related party, because the sale involved only four of the client’s 13 stores, and because it disagreed with how we had valued the client’s assets. The case went to arbitration, and after a hearing, the arbitrator sided with our client on all issues, reducing withdrawal liability to the $1.04 million we had asserted, and awarding the client interest on overpaid withdrawal liability.


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