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khammond on DSKJM1Z7X2PROD with RULES2

Federal Register / Vol. 86, No. 130 / Monday, July 12, 2021 / Rules and Regulations flow statement, and notes for the contributing employer and the consolidated group including the contributing employer, if available, for the most recent 4 years, or, if audited financial statements were not prepared, unaudited financial statements, a statement explaining why audited statements are not available, and tax returns with all schedules for the most recent 4 years available. The financial statement submissions must:
A Identify the cash contributions to the multiemployer plan for which the contributing employer is seeking contribution relief;
B Identify all outstanding indebtedness, including the name of the lender, the amount of the outstanding loan, scheduled repayments interest rate, collateral, significant covenants, and whether the loan is in default;
C Identify and explain any material changes in financial position since the date of the last financial statement;
D To the extent that the contributing employer has undergone or is in the process of undergoing a partial liquidation, estimate the sales, gross profit, and operating profit that would have been reported for each of the 3
years covered by the financial statement for only that portion of the business that is currently expected to continue; and E State the estimated liquidation values for any assets related to discontinued operations or operations that are not expected to continue, along with the sources for the estimates.
vi Projected financial statements income statement, balance sheet, cash flow statement for the current year and the following 4 years as well as the key assumptions underlying those projections and a justification for the reasonableness for each of those key assumptions. The projections must include:
A All business or operating plans prepared by or for management, including all explanatory text and schedules;
B All financial submissions, if any, made within the prior 3 years to a financial institution, government agency, or investment banker in support of possible outside financing or sale of the business;
C All recent financial analyses done by an outside party with a certification by the employers chief executive officer that the information on which each analysis is based is accurate and complete; and D Any other relevant information.
vii Description of events leading to the current financial distress.
viii Description of financial and operational restructuring actions taken
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to address financial distress, including cost cutting measures, employee count or compensation reductions, creditor concessions obtained, and any other restructuring efforts undertaken; also, indicate whether any new profit-sharing or other retirement plan has been or will be established or if benefits under such existing plan will be increased.
e Allocating contributions and other practices. During the SFA coverage period, a decrease in the proportion of income or an increase in the proportion of expenses allocated to a plan that receives special financial assistance pursuant to a written or oral agreement or practice other than a written agreement in existence on March 11, 2021, to the extent not subsequently amended or modified under which the income or expenses are divided or to be divided between a plan that receives special financial assistance and one or more other employee benefit plans is prohibited. The prohibition in the preceding sentence does not apply to a good faith allocation of:
1 Contributions pursuant to a reciprocity agreement;
2 Costs of securing shared space, goods, or services, where such allocation does not constitute a prohibited transaction under ERISA or is exempt from such prohibited transaction provisions pursuant to section 408b2 or 408c2 of ERISA, or pursuant to a specific prohibited transaction exemption issued by the Department of Labor under section 408a of ERISA;
3 The actual cost of services provided to the plan by an unrelated third party; or 4 Contributions where the contributions to a plan that receives special financial assistance required for each base unit are not reduced, except as otherwise permitted by paragraph d of this section.
f Transfer or merger. During the SFA
coverage period, a plan must not engage in a transfer of assets or liabilities including a spinoff or merger except with PBGCs approval. Notwithstanding anything to the contrary in 29 CFR part 4231, the plans involved in the transaction must request approval from PBGC.
1 PBGC will approve a proposed transfer of assets or liabilities including a spinoff or merger if PBGC determines that the transaction complies with section 4231ad of ERISA and that the transaction, or the larger transaction of which the transfer or merger is a part, does not unreasonably increase PBGCs risk of loss with respect to any plan involved in the transaction, and is not reasonably expected to be adverse to the
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overall interests of the participants and beneficiaries of any of the plans involved in the transaction.
2 A request for approval of a proposed transfer of assets or liabilities including a spinoff or merger must be submitted by the plan sponsor or its duly authorized representative and must contain the information that must be submitted with a notice of merger or transfer and a request for a compliance determination under subpart A of part 4231 of this chapter and all of the following actuarial and financial information for each of the plans involved in the transaction:
i A certification by the enrolled actuary that the plan or any of its component parts received special financial assistance and the most recent value of special financial assistance assets.
ii A copy of the actuarial valuation performed for each of the 2 plan years before the most recent actuarial valuation filed in accordance with 4231.9f of this chapter.
iii A copy of the plan actuarys most recent certification under section 305b3 of ERISA, including a detailed description of the assumptions used in the certification, and the basis under which they were determined. The description must include information about the assumptions used for the projection of future contributions, withdrawal liability payments, and investment returns, and any other assumption that may have a material effect on projections.
iv A detailed statement certified by an enrolled actuary that the transaction does not unreasonably increase PBGCs risk of loss with respect to any plan involved in the transaction. The statement must include the basis for the conclusion, supporting data, calculations, assumptions, a description of the methodology, the basis for assumptions used, the projected date of insolvency, and the present value of financial assistance expected to be paid to the plan by PBGC under section 4261
of ERISA as of the date of the transaction individually for each of the plans before and after the transaction.
The present value of financial assistance must be based on the guaranteed benefits and administrative expenses presented in the cash flow projections under paragraph f2v of this section, discounted using interest rates published under section 4044 of ERISA.
v The statement in paragraph f2iv of this section must include an exhibit showing the annual cash flow projections for each plan before and after the transaction, through the year that each plan pays its last dollar of
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