It has become increasingly common for the provisions of the ERISA of a credit contract to affect certain non-U.S. provisions. Plans. As a general rule, the types of plans abroad included in the “ERISA” provisions of the loan contract, foreign pension plans and plans, as well as deferred compensation and severance plans and agreements, defer benefits until termination or retirement. However, the concept of a “controlled group” is generally not applicable in the context of the overseas plan, so it is generally a narrower group of companies that is relevant to this (for example. B, the borrower and its subsidiaries, or perhaps even a guarantor and its subsidiaries). As a result, a borrower may be required to verify whether there are applicable foreign plans and, if so, whether there are problems with the provisions of the plan abroad in their terms and application. If there are no covered pension plans and there have not been covered pension plans in the recent past and the credit facility is not to be accepted, the provisions of the EISA could be simplified by incorporating a federal representation and state, which has not been put in place, has not existed in the recent past or will exist in the future. In the event that a covered plan is effectively called into question or likely in the future, fulminating provisions of ERISA would be added.
The standard market language of a lender is often accepted by the borrower; However, it may be necessary for a lender to understand the underfunding levels of DB plans in the agreement and/or for the parties to be underfunded, if any. Similar considerations may also apply to foreign plans. Lenders want assurance that the borrower is operating in accordance with existing legislation. Credit contracts generally include borrowers` statements that any plan managed by the borrower is in accordance with the existing provisions of ERISA and that there are no outstanding or threatened claims or lawsuits against their plans. These representations are often characterized by a provision on significant negative effects. To the extent that the borrower or a member of the borrower`s “controlled group” (an “ERISA partner”) did not have an ERISA defined benefit pension plan or contributed to a syndicated pension plan subject to ERISA, ERISA`s representations generally pose no problem to a borrower. If the borrower or a member of the borrower`s controlled group has maintained a defined benefit pension plan or contributed to a union plan, several complications may arise.