Introduction
ERISA
issues may arise in two general ways in a securitization transaction:
First, a failure by the sponsor of an ERISA-governed employee benefit plan to make a required contribution to the plan may give rise to PBGC liens on the assets (such as receivables) of the sponsor and its affiliates (such as an SPV). ERISA counsel should be consulted to advise with respect to the appropriate representations, covenants, etc. and structuring considerations to address these issues.
Second, if investors use plan assets subject to ERISA to purchase securities, the fiduciary, conflict of interest and prohibited transaction rules applicable under ERISA to the investment and management of ERISA plan assets may give rise to violations of ERISA and potential liability for the sponsor, servicer, trustee, underwriter and other parties involved in the transaction, see Chapter 16.01 of the Securitization Treatise. ERISA counsel should be consulted to advise whether or not purchasers
