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 the long-running case of Appvion Retirement Savings Retirement and Employee Stock Ownership Plan v. Buth, Case No. 18-CV-1861-WCG (E.D. Wis., Mar. 17, 2022) a magistrate recommended to the court that it dismiss most of the claims in a revised complaint, but allow two to stand. The case involves an ESOP at Appleton Paper (later Appvion). Employees funded the $106 million transaction by investing funds from their 401(k) plan.
Corey Rosen
In PLR 202210004 (March 11, 2022) the IRS issued a private letter ruling concerning a complex business reorganization of a public company that offered an ESOP. The company spun off some of its assets to a new company it controlled and spun out another company as a separate entity.
Corey Rosen
In Novosel v. Azcon Inc. Employee Benefits Plan Committee, No. 21 C 3080, (N.D. Il, E.D., March 8, 2022), a district court dismissed two claims concerning the valuation of stock for their plaintiff in Azcon’s ESOP, but allowed her to continue a breach of contract claim alleging that Azcon miscalculated her share value and distributed $50,000 less than she was owed.
Corey Rosen
In recent years, plaintiffs have been seeking to move to discovery in ESOP litigation based largely on complaints of a drop in share price after a transaction.
Corey Rosen
On February 24, the IRS issued proposed regulations for retirement distributions under the SECURE Act. The 273-page proposal deals with a wide variety of issues, such as how RMDs are distributed to heirs after a participant’s death, how annuities are treated, and other issues.
Corey Rosen
In recent years, plaintiffs have been seeking to move to discovery in ESOP litigation based largely on complaints of a drop in share price after a transaction. In Plutzer v. Bankers Trust Company of South Dakota et. al., No. 1:21-cv-03632-MKV (S.D.N.Y., February 28, 2022), a court dismissed a claim against Bankers Trust of South Dakota, the trustee for the ESOP at Tharanco Group.
Corey Rosen
In PLR 202206009, Feb. 11. 2022, the IRS ruled that a taxpayer who sold stock to an ESOP and took the capital deferral treatment available under Section 1042 of the Code will not be treated as having made a disposition of the qualified replacement property purchased after the sale into a grantor trust the taxpayer controls.
Corey Rosen
In Hensiek v. Bd. of Dirs. of Casino Queen Holding Co., No. 3:20-CV-377-DWD (S.D. Ill., Jan. 28, 2022), a federal judge denied an Illinois casino company’s motion to dismiss a proposed class action from former employees who allege the company’s ESOP overpaid for shares in the now closed casino company.
Corey Rosen
In Larson v. Commissioner, T.C. Memo 2022-3, No. 15809-11, (U.S. Tax Court, Feb. 2, 2022), the tax court rejected an appeal by the plaintiff over an assessment of several million dollars in taxation for his nominally restricted stock.
Corey Rosen
In Ahrendsen, et al. v. Prudent Fiduciary Services, LLC, et al., No. 2:21-cv-02157 (E.D., PA, Feb. 2, 2022), a district court allowed an ESOP valuation case against the sellers and the trustee on the case to proceed to trial.
