In Central States, Southeast & Southwest Areas Pension Fund v. Sheets Enterprise, No. 24 cv 2277 (N.D. Ill.), a district court held that an employer could not avoid being held liable for withdrawal liability simply because it had been dissolved under state law. The decision is instructive because it shows the limits that state law dissolution proceedings may have in avoiding obligations like withdrawal liability that are created by federal law.
Background
Sheets Enterprises ("Sheets") was a Kentucky corporation that contributed to the Central States Pension Fund (the "Fund"). In late-2016, Sheets ceased all operations for which contributions were required to the Fund, thereby effecting a complete withdrawal, and the next year, Sheets filed a notice of dissolution with the Kentucky Secretary of State. The Fund only learned of Sheets' withdrawal and its subsequent dissolution in May 2023, nearly six years later. In November 2023, the Fund assessed Sheets with $675,000 in withdrawal liability and commenced suit when Sheets failed to pay.
Sheets did not commence arbitration to challenge the withdrawal liability, and instead presented two principal arguments in the collection litigation. First, it argued that the court lacked personal jurisdiction to entertain suit against a dissolved corporation. Second, Sheets argued that the Fund's claim had been extinguished as part of dissolution proceedings under Kentucky state law. Those laws provide that a dissolved corporation may...
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