Liability for termination of single-employer plans under a distress termination or a termination by corporation

In any case in which a single-employer plan is terminated in a distress termination under section 1341(c) of this title or a termination otherwise instituted by the corporation under section 1342 of this title, any person who is, on the termination date, a contributing sponsor of the plan or a member of such a contributing sponsor’s controlled group shall incur liability under this section. The liability under this section of all such persons shall be joint and several. The liability under this section consists of— Except as provided in subparagraph (B), the liability to the corporation of a person described in subsection (a) shall be the total amount of the unfunded benefit liabilities (as of the termination date) to all participants and beneficiaries under the plan, together with interest (at a reasonable rate) calculated from the termination date in accordance with regulations prescribed by the corporation. For purposes of subparagraph (A), in any case described in section 1341(c)(3)(C)(ii) of this title, actuarial present values shall be determined as of the date of the notice to the corporation (or the finding by the corporation) described in such section. Except as provided in subparagraph (B), the liability to the corporation under this subsection shall be due and payable to the corporation as of the termination date, in cash or securities acceptable to the corporation. Payment of so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection (a) (including interest) shall be made under commercially reasonable terms prescribed by the corporation. The parties involved shall make a reasonable effort to reach agreement on such commercially reasonable terms. Any such terms prescribed by the corporation shall provide for deferral of 50 percent of any amount of liability otherwise payable for any year under this subparagraph if a person subject to such liability demonstrates to the satisfaction of the corporation that no person subject to such liability has any individual pre-tax profits for such person’s fiscal year ending during such year. The corporation and any person liable under this section may agree to alternative arrangements for the satisfaction of liability to the corporation under this subsection. A person described in subsection (a) shall be subject to liability under this subsection to the trustee appointed under subsection (b) or (c) of section 1342 of this title. The liability of such person under this subsection shall consist of— The collective net worth of persons subject to liability in connection with a plan termination consists of the sum of the individual net worths of all persons who— For purposes of this paragraph, the net worth of a person is— For purposes of this paragraph, determinations of net worth shall be made as of a day chosen by the corporation (during the 120-day period ending with the termination date) and shall be computed without regard to any liability under this section. The term “pre-tax profits” means— Except as provided in paragraphs (3) and (4), if there is a substantial cessation of operations at a facility in any location, the employer shall be treated with respect to any single employer plan established and maintained by the employer covering participants at such facility as if the employer were a substantial employer under a plan under which more than one employer makes contributions and the provisions of sections 1363, 1364, and 1365 of this title shall apply. For purposes of this subsection: The term “substantial cessation of operations” means a permanent cessation of operations at a facility which results in a workforce reduction of a number of eligible employees at the facility equivalent to more than 15 percent of the number of all eligible employees of the employer, determined immediately before the earlier of— Subject to subparagraphs (C) and (D), the term “workforce reduction” means the number of eligible employees at a facility who are separated from employment by reason of the permanent cessation of operations of the employer at the facility. An eligible employee separated from employment at a facility shall not be taken into account in computing a workforce reduction if, within a reasonable period of time, the employee is replaced by the employer, at the same or another facility located in the United States, by an employee who is a citizen or resident of the United States. If, whether by reason of a sale or other disposition of the assets or stock of a contributing sponsor (or any member of the same controlled group as such a sponsor) of the plan relating to operations at a facility or otherwise, an employer (the “transferee employer”) other than the employer which experiences the substantial cessation of operations (the “transferor employer”) conducts any portion of such operations, then— an eligible employee separated from employment with the transferor employer at the facility shall not be taken into account in computing a workforce reduction if— an eligible employee who continues to be employed at the facility by the transferee employer shall not be taken into account in computing a workforce reduction if— Paragraph (1) shall not apply with respect to a single employer plan if, for the plan year preceding the plan year in which the cessation occurred— An employer may elect to satisfy the employer’s liability with respect to a plan by reason of paragraph (1) by making additional contributions to the plan in the amount determined under subparagraph (B) for each plan year in the 7-plan-year period beginning with the plan year in which the cessation occurred. Any such additional contribution for a plan year shall be in addition to any minimum required contribution under section 1083 of this title for such plan year and shall be paid not later than the earlier of— Except as provided in clause (iii), the amount determined under this subparagraph with respect to each plan year in the 7-plan-year period is the product of— For purposes of clause (i), the reduction fraction of a single employer plan is equal to— The additional contribution under this subparagraph for any plan year shall not exceed the excess, if any, of— An employer’s obligation to make additional contributions under this paragraph shall not apply to— If the Secretary of the Treasury issues a funding waiver under section 1082(c) of this title with respect to the plan for a plan year in the 7-plan-year period under subparagraph (A), the additional contribution with respect to such plan year shall be permanently waived. An employer maintaining a plan with respect to which such a funding waiver has been issued or a request for such a funding waiver is pending shall provide notice to the Secretary of the Treasury, in such form and at such time as the Secretary of the Treasury shall provide, of a cessation of operations to which paragraph (1) applies. An employer making the election under this paragraph shall provide notice to the Corporation, in accordance with rules prescribed by the Corporation, of— If an employer fails to pay the additional contribution in the full amount for any year in the 7-plan-year period by the due date for such payment, the employer shall, as of such date, be liable to the plan in an amount equal to the balance which remains unpaid as of such date of the aggregate amount of additional contributions required to be paid by the employer during such 7-year-plan period. The Corporation may waive or settle the liability described in the preceding sentence, at the discretion of the Corporation. The Corporation may bring a civil action in the district courts of the United States in accordance with section 1303(e) of this title to compel an employer making such election to pay the additional contributions required under this paragraph. For purposes of this subsection: The term “eligible employee” means an employee who is eligible to participate in an employee pension benefit plan (as defined in section 1002(2) of this title) established and maintained by the employer. The term “funding target” means, with respect to any plan year, the funding target as determined under section 1306(a)(3)(E)(iii)(I) of this title for purposes of determining the premium paid to the Corporation under section 1307 of this title for the plan year. The market value of the assets of a plan shall be determined in the same manner as for purposes of section 1306(a)(3)(E) of this title. For purposes of paragraphs (1) and (2), an employer shall not be treated as ceasing operations at a qualified lodging facility (as defined in section 856(d)(9)(D) of title 26) if such operations are continued by an eligible independent contractor (as defined in section 856(d)(9)(A) of such title) pursuant to an agreement with the employer. The workforce reduction under paragraph (2) with respect to any cessation of operations shall be determined by taking into account any separation from employment of any eligible employee at the facility (other than a separation which is not taken into account as workforce reduction by reason of subparagraph (C) or (D) of paragraph (2)) which— For purposes of section 1083(f)(6)(B) of this title and section 430(f)(6)(B) of title 26, any additional contribution made under paragraph (4) shall be treated in the same manner as a contribution an employer is required to make in order to avoid a benefit reduction under paragraph (1), (2), or (4) of section 1056(g) of this title or subsection (b), (c), or (e) of section 436 of title 26 for the plan year.