Fourth Circuit Rules on Withdrawal Liability Statute of Limitations
The Fourth Circuit Court of Appeals has ruled that a 'contingent' proof of claim does not trigger the statute of limitations for collecting withdrawal liability under the Employee Retirement Income Security Act (ERISA). This decision clarifies the timing for initiating collection actions.
Case Background
The case involved a company that filed for bankruptcy and submitted a contingent proof of claim related to potential withdrawal liability from a multiemployer pension plan. The plan sought to collect the liability after the company's reorganization.
Court's Decision
The Fourth Circuit held that the filing of a contingent proof of claim does not start the statute of limitations clock for withdrawal liability collection. The court emphasized that the liability must be assessed and demanded before the limitations period begins.
Implications for Employers and Pension Plans
This ruling provides guidance on the timing of withdrawal liability assessments and collections. Employers should be aware that contingent claims in bankruptcy do not necessarily initiate the statute of limitations, and pension plans must ensure timely assessments to preserve their rights.
