Emory Bankruptcy Developments Journal


Five circuit courts have determined whether an employer's unpaid contributions due under an employee benefit plan are plan assets under ERISA. When unpaid contributions are plan assets, the individual exercising authority or control over the assets is imputed fiduciary status under ERISA and, in turn, owes certain fiduciary duties and obligations to employee benefit funds. If the fiduciary fails to make the required contributions, then that individual becomes personally liable for the unpaid contributions. In bankruptcy, this result means that the unpaid contributions would be a nondischargeable debt if the court holds the individual liable for defalcation. This Comment reconciles the circuit split between the courts that decided this issue in bankruptcy and nonbankruptcy proceedings. It proposes a three-step approach that will allow courts determining this issue in bankruptcy proceedings to mirror their counterparts while still preserving the spirit of the Bankruptcy Code.