Chris Wingard, an Associate in Kleinbard’s Business & Finance Practice, authored a post on the U.S. Court of Appeals for the Seventh Circuit affirming a district court judgment in favor of GreatBanc Trust Company and former directors and executives of the Segerdahl Corporation for the National Center for Employee Ownership (NCEO)’s Employee Ownership Legal Digest. In the initial lawsuit, ESOP participant Bruce Rush, argued that GreatBanc, as the ESOP’s trustee, and company insiders breached ERISA fiduciary duties in connection with the 2016 sale of the ESOP-owned printing company to a private equity firm ICV Partners for $265 million. The court ruled in favor of GreatBanc and the executives, and upon appeal the Seventh Circuit affirmed this decision, noting that GreatBanc acted prudently, relied appropriately on independent financial and legal advisors, and independently evaluated the transaction before approval. The court also rejected prohibited transaction claims, concluding that the sale resulted from an arm’s-length process and reflected fair market value. The decision underscores that ESOP company sales can reduce litigation risk when supported by a well-documented process, an active trustee, and independent financial and legal advice.
To read the post, click here.
