29 CFR 4043.34 - Loan default.
(a) Reportable event. A reportable event occurs for a plan whenever there is a default by a member of the plan's controlled group with respect to a loan with an outstanding balance of $10 million or more, if -
(1) The default results from the debtor's failure to make a required loan payment when due (unless the payment is made within 30 days after the due date);
(2) The lender accelerates the loan; or
(3) The debtor receives a written notice of default from the lender (and does not establish the notice was issued in error) on account of:
(i) A drop in the debtor's cash reserves below an agreed-upon level;
(ii) An unusual or catastrophic event experienced by the debtor; or
(iii) A persisting failure by the debtor to attain agreed-upon financial performance levels.
(b) Initial information required. In addition to the information in § 4043.3(b), the notice shall include -
(1) A copy of the relevant loan documents (e.g., promissory note, security agreement);
(2) The due date and amount of any missed payment;
(3) A copy of any notice of default from the lender; and
(4) A copy of any notice of acceleration from the lender.
(c) Waivers -
(1) Default cured. Notice is waived if the default is cured, or waived by the lender, within 30 days or, if later, by the end of any cure period provided by the loan agreement.
(2) Foreign entity. Notice is waived if the debtor is a foreign entity other than a foreign parent.
(3) Plan funding. Notice is waived if -
(i) No variable rate premium. No variable rate premium is required to be paid for the plan for the event year;
(ii) $1 million unfunded vested benefits. As of the testing date for the event year, the plan has less than $1 million in unfunded vested benefits;
(iii) No unfunded vested benefits. As of the testing date for the event year, the plan would have no unfunded vested benefits if unfunded vested benefits were determined in accordance with the assumptions and methodology in § 4010.4(b)(2) of this chapter; or
(iv) 80-percent funded. As of the testing date for the event year, the fair market value of the plan's assets is at least 80 percent of the plan's vested benefits amount.
(d) Notice date and extensions -
(1) In general. Except as provided in paragraph (d)(2) or (d)(3) of this section, the notice date is 30 days after the person required to report knows or has reason to know of the occurrence of the default, without regard to the time of any other conditions required for the default to be reportable.
(2) Cure period extensions. The notice date is extended to one day after -
(i) The applicable cure period provided in the loan agreement (in the case of a reportable event described in paragraph (a)(1) of this section);
(ii) The date the loan is accelerated (in the case of a reportable event described in paragraph (a)(2) of this section); or
(iii) The date the debtor receives written notice of the default (in the case of a reportable event described in paragraph (a)(3) of this section).
(3) Form 1 extension. The notice date is extended to 30 days after the plan's variable rate premium filing due date for the event year, if a waiver under any of paragraphs (c)(3)(i) through (c)(3)(iv) of this section would apply if the “the plan year preceding the event year” were substituted for “the event year.”
(4) Foreign parent and foreign-linked entities. With respect to a loan default involving only a foreign parent or a foreign-linked entity, the notice date is extended to 30 days after the plan's first Form 5500 due date after the person required to notify the PBGC has actual knowledge of the default and of the controlled group relationship.
(5) Example. Company A has a debt with an outstanding balance of $20 million, for which a payment is due on October 1. Under the terms of the loan, the default may be cured within 10 days. Company A does not make the payment until October 31. Because Company A has made the payment within 30 days of the due date, no reportable event has occurred. If Company A does not make the payment by October 31, a reportable event will have occurred on October 1, and notice will be due by October 31.
Title 29 published on 2015-07-01
The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 29 CFR Part 4043 after this date.