Our attorneys work with clients from all industries and of all sizes in the design, implementation and administration of Employee Stock Ownership Plans (ESOPs). We also represent ESOP fiduciaries, including internal and independent trustees and administrative committees, to ensure compliance with ESOP fiduciary duties and prohibited transaction rules. When necessary, we represent clients in state and federal court proceedings, before administrative bodies and in alternative dispute resolution and mediation.
ESOPs can be a valuable tool for attracting and retaining employees and provide a tax-advantaged method for financing ongoing business activities, such as acquisitions, share repurchases, infrastructure development and construction and for creating an opportunity for owners of closely held businesses to sell their shares on a tax-deferred basis. We work with ESOP clients to navigate regulatory oversight, represent clients facing governmental audits and investigations, and provide preventive counseling in order to avoid situations that may lead to regulatory scrutiny. We have counseled ESOP plan sponsors, fiduciaries, lenders, advisers and selling shareholders.
Our firm also has unique knowledge and longstanding experience with ESOP litigation in federal and state trial and appeals courts, bankruptcy courts, tax court, arbitrations, mediations, Department of Labor investigations and Internal Revenue Service audits. We have represented companies that sponsor ESOPs and other benefit and retirement plans holding employer stock, their directors and officers, institutional, outside and internal trustees, members of committees, plan administrators, valuation advisors, consultants, investment bankers, lenders, accountants and other professional advisors.
Our attorneys have successfully defended the highest profile and most complex precedent-setting lawsuits brought by plan participants and the Department of Labor alleging violations of ERISA and state corporate laws, as well as many complex and sensitive DOL investigations and IRS audits. These lawsuits and investigations have involved a wide range of claims and issues, including prohibited transactions, breaches of fiduciary duties relating to transactions, valuations, projection of repurchase obligation, plan and distribution policy provisions, diversification, allocations, compensation of directors and officers and plan terminations, as well as claims and issues relating to tax laws and regulations and bankruptcy law.
A number of our attorneys have served in the Department of Labor, Pension Benefit Guaranty Corporation and Internal Revenue Service. We are active in the National Center for Employee Ownership, the ESOP Association and ESCA, serve on their committees and speak at their national and regional conferences.
We provide proactive solutions that help employers achieve their goals while complying with the legal requirements involved in the implementation and maintenance of an ESOP. These are our ESOP services and representative matters:
ESOP Development and Maintenance
- Assist with the development and establishment of ESOP objectives
- Review ESOP due diligence, feasibility and design studies
- Consult and advise on alternatives for structuring ESOP transactions
- Prepare ESOP plan documents and trust agreements
- Prepare ESOP transaction documentation
- Prepare, review and negotiate ESOP loan documentation
- Conduct compliance reviews and advise on needed corrective actions
- Advise on day-to-day ESOP operational issues
- Counsel clients concerning ESOP participant claims and qualified domestic relations orders (QDROs)
- Advise on ERISA reporting and disclosure issues affecting ESOPs
- Advise and counsel clients on federal and state securities laws affecting ESOPs
- Advise on use of an ESOP to acquire another company
- Represent shareholders of C corporations on the tax-deferred sale of their company shares to the ESOP
- Advise C corporation ESOP companies on the advantages and disadvantages of converting to S corporation status
- Advise and consult on ESOP distribution policies and related repurchase obligation strategies
- Represent ESOP clients in IRS favorable determination letter and private letter ruling requests
ESOP Fiduciary Services
- Advise ESOP plan sponsors and trustees on fiduciary issues related to ESOP financing and stock acquisitions
- Advise and consult on corporate governance issues
- Counsel in connection with Internal Revenue Service and U.S. Department of Labor audits and investigations
- Assist clients in selection of ESOP fiduciaries and appraisers
- Represent clients along the entire dispute continuum, from litigation avoidance and pre-litigation planning through pre-trial motions, discovery, trial and appeal.
- Provide litigation defense in lawsuits or regulatory enforcement actions
- Provide expert testimony in ESOP-related litigation
ESOP Transactions Representative Matters
- Conducted an exhaustive analysis for a privately held client that contemplated converting from a C corporation to an S corporation. The company had a number of shareholders with significant blocks held by trusts and members of two family groups. With management and the board, we examined the potential corporate governance, tax and ESOP legal implications from such a conversion.
- Represented the independent trustee in connection with the establishment of an ESOP by a privately held retail business and the purchase of 40 percent of the common stock owned by the company’s founder.
- Represented a major shareholder in a medical technology company in connection with the sale of his remaining shares of company stock to an ESOP.
- Represented an architectural firm in connection with the termination of its ESOP.
- Advised a company’s internal ESOP trustee on its fiduciary responsibilities upon receipt of a tender offer for company shares.
- Advised a number of independent fiduciaries in connection with the purchase by a company’s ESOP of 100 percent of the stock from a selling shareholder.
- Represented a commercial bank in financing an ESOP purchase transaction.
- Represented a publicly traded chemical company in connection with issues related to the sale of its ESOP convertible preferred stock to a French company pursuant to a tender offer.
- Represented the independent trustee of an ESOP in connection with the sale of the ESOP sponsor's assets to a third party buyer and advised on the related pass-through voting issues.
- Represented a construction company in the establishment of an S corporation ESOP.
- Represented the independent trustee of an ESOP established by a C corporation in connection with the acquisition of 100 percent of the company's stock and its subsequent conversion to S-corporation status.