In times of economic distress, creditors start to look for untraditional sources of payment. Private equity owners represent a rich target for creditors of portfolio companies.
While liability under traditional common-law alter-ego or veil-piercing theories is not commonly assessed against funds, there are numerous other sources of potential liability, principally the plethora of federal and state statutes regulating broad aspects of any portfolio company operations.
In part one of Faegre Drinker’s three part series for the Wall Street Lawyer, private equity partner David Denious and labor and employment partner Gerald T. Hathaway examine this type of risk in the context of the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”).
