Levenfeld Pearlstein, LLC (LP) has extensive experience in the legal and financial issues involved in the formation and administration of Employee Stock Ownership Plans (ESOPs) and has represented clients throughout the United States in various aspects of ESOP transactions. Our attorneys are nationally-recognized for their experience in working with owners who have sold their business to an ESOP and for their skill in assisting ESOP companies comply with the complex laws and regulations involved in the administration of their plans. Our attorneys also have experience restructuring companies wishing to form an ESOP to fully realize preferential tax benefits available to them.

Representative Matters

• We recently served as lead counsel to a group of Chicago-based commodity trading and brokerage firms in connection with the formation of new ESOP. We assisted the owners of the prior companies to restructure their operations into a new S corporation holding company in order to facilitate the ESOP’s acquisition of 100% of the stock of the new holding company. We also assisted the new company to obtain regulatory approval for the ESOP transaction from the Financial Industry Regulatory Authority (FINRA).

• We acted as lead counsel in a multi-step transaction where an ESOP became the sole owner of a Chicago-based company which designs and manufactures injection molds and a second company which manufactures thermoplastic injection molded products. We worked with the shareholders of the companies to reorganize their business into a new holding company, assisted the new holding company in forming an ESOP, and negotiated a redemption transaction where the new holding company redeemed all non-voting stock and sold all voting stock of the new holding company to the ESOP. We also represented the holding company in connection with a new senior credit facility to provide the funds necessary to consummate the stock sale transactions.

• We acted as special counsel to the board of directors of an ESOP-owned company that received a purchase offer from a private equity firm. We assisted the ESOP company's corporate counsel in negotiating the terms of the offer and counseled the client regarding the special terms of the purchase contracts applicable to the ESOP. We also prepared various plan document amendments to address the sale of the company and the issues associated with the post-closing administration of the ESOP.

• We acted as counsel to a Chicago-based investment management firm which recently amended and restated their ESOP plan documents to comply with new rules and regulations issued by the Internal Revenue Service. We regularly counsel this client regarding various administrative matters, including developing an ESOP distribution policy. We recently assisted this client in connection with an audit by the United States Department of Labor and negotiated a settlement of all of the issues discovered during the audit. We also represented this client in a transaction in which the client redeemed shares of company stock allocated to the ESOP accounts of terminated participants in order to reallocate those shares to new employees.

ESOP FIDUCIARY REPRESENTATION

We have also represented ESOP fiduciaries in various types of transactions involving ESOPs, including acquisitions and divestitures involving the plan sponsor and ESOP termination.

Representative Matters

• We represented an independent ESOP fiduciary who was engaged as a successor trustee of an ESOP formed by a California-based manufacturer of tire inflation systems used by the U.S. Military in connection with the purchase of 100% of the stock of the company from its founder for $19 million.

• We represented a trust company which was engaged to serve as an independent fiduciary for an ESOP transaction under which the remaining non-ESOP shares were sold to the ESOP by the company's chief executive officer.

• We represented a trust company which served as trustee of an ESOP in two separate transactions where the ESOP acquired shares of company stock from management shareholders in order to facilitate the conversion of the company to a 100% ESOP-owned S corporation to gain more favorable tax treatment.

• We represented a trust company which was the discretionary trustee of an ESOP in the sale of 100% of the stock held by the ESOP to a publicly traded company.

• We represented an independent ESOP fiduciary appointed by the company’s board of directors to approve a transaction in which the stock owned by the majority shareholders was redeemed by the company to settle a dispute amongst sellers of stock and non-ESOP shareholders.

ESOP LENDER REPRESENTATION

We also have experience working with various banking institutions in financing transactions involving ESOP companies.

Representative Matters

• We represented a national banking institution in connection with a $20.5 million revolving and term loan credit facility which was used to finance the acquisition by an ESOP of 100% of the stock of a citrus grower and distributor located in Southern California.

• We represented a Chicago-based lender who participated in a $90 million credit facility which was used to finance a 100% ESOP leveraged buyout transaction.

• We represented a Chicago-based lender who provided a $25 million credit facility to an ESOP to refinance prior loans by company shareholders and to enable the company to obtain additional funds for working capital and future acquisitions.

• We represented a Chicago-based lender who provided all of the financing for a 100% ESOP leveraged buyout transaction involving a nationally-recognized manufacturer of maps and topographical information used by the travel and construction industries.

Levenfeld Pearlstein is a member of the ESOP Association and the National Center For Employee Ownership (NCEO). Our ESOP attorneys have also lectured frequently on ESOPs and other employee benefit topics and have authored a treatise discussing the benefits of S corporation ESOPs.