A growing number of multiemployer pension plans and welfare plans, which are common in the construction, transportation and retail food sectors, have modified plan or trust terms to make employer contributions which are due and owning but not paid “plan assets.” Although the due and owing amount is sitting in the company’s bank account awaiting disbursement along with other accounts payable, courts consider the amount due to be a “plan asset” if the plan or trust has a provision to the effect that amounts due and owing are plan assets.
As a plan asset, whoever in the company has the authority to make (or not make) the disbursement may be considered to be a fiduciary under ERISA. As a fiduciary, the person is personally liable for the amount which is due and owing to the fund. West Virginia Laborers’ Pension Trust Fund v. Owens Pipeline Services, ___ F.Supp.2d ___, Case No. 2:10-cv-00131 (S.D. WV Nov. 18, 2011).
Further, the bankruptcy of the company will not extinguish this personal liability and the personal bankruptcy of the individual may not discharge the obligation if the non-payment is considered to be a fraud or defalcation while acting in a fiduciary capacity within the meaning of Section 523(a)(4) of the bankruptcy code. The courts are divided on whether an individual who is a fiduciary under ERISA is also a fiduciary under the bankruptcy code. See, Trustees of Iron Workers v. Mayo,(In re Mayo), 2007 WL 2713064 (Bankr. D. Vt. Sept. 17, 2007), Bd. Trustees of the Ohio Carpenters’ Pension Fund v. Bucci, (In re Bucci), 493 F.3d 635 (6th Cir. 2007).
Posted by Carl H. Hellerstedt, Jr. Mr. Hellerstedt is Counsel with Spilman Thomas & Battle, PLLC. His primary areas of practice are labor and employment and ERISA law.