III. Potential Implications The decision of the District Court, if upheld by the First Circuit14 or adopted by other courts, certainly has the potential to make a significant impact, as an initial matter, on the manner in which private equity funds evaluate risk associated with pension liabilities of their portfolio companies and their strategies for mitigating that risk. Presumably, the effect of the decision would be the same with regard to single-employer pension liabilities, which are governed by the same general controlled group liability principles, and may result in more aggressive positioning by the Pension Benefit Guaranty Corporation in cases where it is faced with collecting plan termination liabilities from a portfolio company owned by a group of related private equity funds. Whether the “controlled group” expanded by the partnership-in-fact analysis adopted by the District Court would extend to other portfolio companies of related funds (i.e., such that the portfolio companies themselves may be liable for each other’s plan termination and withdrawal liabilities), and to what degree, is likely fact dependent and not clear from the Opinion as such. That result, however, would likely affect lending arrangements entered into with private equity portfolio companies since the representations, covenants and default provisions in credit agreements generally extend to all members of their ERISA controlled group. It also could have potentially far reaching consequences for the design and administration of employee benefit plans, affecting matters ranging from nondiscrimination and coverage requirements for qualified retirement plans and health and welfare plans to the employer mandate under healthcare reform legislation, due to the fact that identical regulatory provisions are referenced in defining the controlled group concepts applicable under those rules. * * * If you have any questions about the issues addressed in this memorandum or if you would like a copy of any of the materials mentioned, please do not hesitate to call or email Glenn Waldrip at 212.701.3110 or gwaldrip@cahill.com; or Mark Gelman at 212.701.3061 or mgelman@cahill.com. 14 A Notice of Appeal, filed on behalf of the Funds, was entered on April 6, 2016. This memorandum is for general information purposes only and is not intended to advertise our services, solicit clients or represent our legal advice. 80 Pine Street | New York, NY 10005 | t: +1.212.701.3000 | f: +1.212.269.5420 | Cahill.com 3 3 .