§ 4062.4 Determinations of net worth and collective net worth. ( a ) *General rules.* When a contributing sponsor, or member(s) of a contributing sponsor's controlled group, notifies and submits information to the PBGC in accordance with § 4062.6, the PBGC shall determine the net worth, as of the net worth record date, of that contributing sponsor and any members of its controlled group based on the factors set forth in paragraph (c) of this section and shall include the value of any assets that it determines, pursuant to paragraph (d) of this section, have been improperly transferred. In making such determinations, the PBGC will consider information submitted pursuant to § 4062.6. The PBGC shall then determine the collective net worth of persons subject to liability in connection with a plan termination.
( b ) *Partnerships and sole proprietorships.* In the case of a person that is a partnership or a sole proprietorship, net worth does not include the personal assets and liabilities of the partners or sole proprietor, except for the assets included pursuant to paragraph (d) of this section. As used in this paragraph, “personal assets” are those assets which do not produce income for the business being valued or are not used in the business.
( c ) *Factors for determining net worth.* A person's net worth is to be determined on the basis of the factors set forth below in this section, to the extent relevant; different factors may be considered with respect to different portions of the person's operations. Generally, fair market value, as defined in § 4001.2 of this chapter, is to be used. As appropriate, fair value in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) is to be used. ( 1 ) A bona fide sale of, agreement to sell, or offer to purchase or sell the business of the person made on or about the net worth record date.
( 2 ) A bona fide sale of, agreement to sell, or offer to purchase or sell stock or a partnership interest in the person, made on or about the net worth record date.
( 3 ) If stock in the person is publicly traded, the price of such stock on or about the net worth record date.
( 4 ) The price/earnings ratios and prices of stocks of similar trades or businesses on or about the net worth record date.
( 5 ) The person's economic outlook, as reflected by its earnings and dividend projections, current financial condition, and business history.
( 6 ) The economic outlook for the person's industry and the market it serves.
( 7 ) The appraised value, including the liquidating value, of the person's tangible and intangible assets.
( 8 ) The value of the equity assumed in a plan of reorganization of a person in a case under title 11, United States Code, or any similar law of a state or political subdivision thereof.
( 9 ) Any other factor relevant in determining the person's net worth.
( d ) *Improper transfers.* A person's net worth shall include the value of any assets transferred by the person which the PBGC determines were improperly transferred for the purpose, as inferred from all the facts and circumstances, and with the effect of avoiding liability under this part. Assets “improperly transferred” include but are not limited to assets sold, leased or otherwise transferred for less than adequate consideration and assets distributed as gifts, capital distributions and stock redemptions inconsistent with past practices of the employer. The word *transfer* includes but is not limited to sales, assignments, pledges, leases, gifts and dividends.
[61 FR 34079, July 1, 1996, as amended at 88 FR 44052, July 11, 2023]