Stay informed on the latest legal developments impacting employee ownership. This page provides timely and concise summaries of key cases and rulings, contributed by experienced attorneys, to help the entire employee ownership community understand their implications, and also offers access to NCEO's archive of prior content.
Corey Rosen
In Henry v. Wilmington Trust et al., No. C.A. 19-1925 DM (D.C. Del. June 30, 2023), a district court ruled that a plaintiff (Henry) was not subject to an arbitration clause in the company’s ESOP. Henry contends the ESOP had overpaid for the shares at BSC Ventures.
Corey Rosen
SECURE 2.0 expanded the application of the Employee Plans Compliance Resolution System (EPCRS), which allows companies to voluntarily correct certain errors.
Corey Rosen
In CPESAZ v. Oxford Restructuring Advisers, Bk. No. 9:20-bk-10554-DS (9th Cir. Bankruptcy Appellate Panel, June 2, 2023), the 9th Circuit ruled that ESOP participants in an ESOP at Community Provider of Enrichment Services Arizona do not have grounds for filing claims against the company in a bankruptcy liquidation case.
Corey Rosen
In Smith v. Greatbanc Trust, No. 20 C 2350 (D. Ill. June 7, 2023), a district court approved a $14.8 million settlement involving an ESOP at Triad Manufacturing. The ESOP had purchased the company for $106 million in 2015.
Corey Rosen
In Gamino v. KPC Healthcare Holdings, Inc. et al., No. 5:20-V-01126-SB-SHK (C.D. Cal. June 5, 2023), Silver Point Capital agreed to a $100,000 settlement over its role in the ESOP at KPC Healthcare. Silver Point had previously won a dismissal from the case.
Corey Rosen
The US Department of Labor (DOL) has stated that it will undertake a formal notice and comment rulemaking “relatively soon” on the adequate consideration requirement governing the valuation of ESOP-held shares.
Corey Rosen
In Smith v. GreatBanc Trust Company, No. 20 C 2350 (N.D. Ill. Feb. 9, 2023), plaintiffs and defendants agreed to settle a case in which the plaintiffs argued that their ESOP paid $104 million for stock they contend was worth only $4 million.
Corey Rosen
About 4,000 employees of failed Silicon Valley Bank will get back $25 million that they had set aside to buy stock at a discount under the bank’s employee stock purchase plan.
Corey Rosen
The Small Business Administration (SBA) has taken steps to make loans to ESOPs much easier than under prior rules. The agency had received considerable criticism for issuing requirements for ESOP loans that are inconsistent with the language and intention of the Main Street Employee Ownership Act (MSEOA).
Corey Rosen
In Harrison v. Envision Management Holding Company, No. 22-1098 (10th Cir. Apr. 11, 2023), the 10th Circuit denied a request that it reconsider its earlier three-judge ruling that Envision Management Holding Company cannot compel arbitration in a case concerning the price an ESOP paid for shares in the company.
