SPECIAL SITUATIONS • Employee Benefits in Lending Transactions The line of credit or other lending transactions that a business utilizes to fund its operations or expansion is a critical element to the success or failure of the business. The lender often requests as a part of the lending documents that representations, warranties and covenants be included relating to the employee benefit programs of the business. Errors or violations of the representations, warranties or covenants will usually be an event of default enabling the lender to require immediate repayment of the entire loan. Corporate officials negotiating lending transactions are often unfamiliar with the information needed to determine whether the requested wording of the loan documents will cause issues. At the same time, corporate employees handling the ongoing operations of the benefit plans are typically unaware of the types of situations that need to be reported or avoided to prevent triggering default events under existing loan agreements. Myers & Shaw, P.A. offers its clients experience and expertise in negotiating the employee benefit provisions reflected in loan documents and in handling the ongoing responsibilities of adhering to the loan covenants once the financing is in place. • Employee Benefits in Mergers and Acquisitions Employee benefits are a critical, yet often overlooked, facet of corporate restructuring. Legal agreements that must be signed to consummate proposed transactions often include representations, warranties and covenants relating to employee benefits. Breach of or errors in the representations, warranties or covenants can prevent deals from closing, result in monetary penalties or result in purchase price adjustments. Corporate officials responsible for the negotiations are typically very busy with other issues and are often unfamiliar with the purpose of the requested disclosures and covenants. Our experience in dealing with diverse benefit and compensation structures enables us to perform the necessary analysis and risk assessment quickly, providing assurance to the transaction that the necessary inquiries and disclosures have been addressed. We can also assist in consolidating plans and designing a benefits package that meets the needs of the parties after the transaction has closed. • Employee Benefits in Bankruptcy Situations The handling of employee benefit obligations when an employer files for reorganization or liquidation in bankruptcy requires special legal knowledge and coordination with bankruptcy counsel. At these difficult times it is essential that the employer receive quick and accurate advice in connection with the prior and ongoing obligations under employee benefit plans. Myers & Shaw, P.A. regularly serves as special employee benefit counsel in bankruptcy situations involving retirement plans, 401(k) plans and health and welfare plans. • Qualified Domestic Relations Orders (QDROs) When a plan receives a domestic relations order concerning the division of a participant's plan assets, it is the responsibility of the plan administrator (typically the employer) to determine that the order meets all of the necessary requirements. If a plan accepts an order that should not qualify and incorrectly pays a participant's benefits to an alternate payee, then both the plan and its administrator can be held liable to the participant for the amount of the improper payment. Myers & Shaw, P.A. is experienced in QDRO administration and is available to review proposed orders to ensure that they meet all applicable QDRO requirements. In addition, Plan sponsors are required by law to maintain a written QDRO policy and to administer the policy fairly among the plan participants. Myers & Shaw, P.A. regularly assists its clients in drafting the plan's required QDRO policy and procedures. |
