Employee stock ownership plans (“ESOPs”) have become an increasingly popular vehicle for the sale of privately owned businesses and an attractive lending opportunity for banks and other third-party lenders. However, this popularity has been met recently with enhanced scrutiny from various plaintiffs’ law firms and the US Department of Labor. Mayer Brown’s ESOP lending, regulatory and litigation team has been closely monitoring this scrutiny and, in this Legal Update, provides an overview of leveraged ESOPs and some of the current issues facing ESOP trustees and their related fiduciary duties.
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