[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4043.34]

[Page 838-839]
 
                             TITLE 29--LABOR
 
            CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION
 
PART 4043_REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION REQUIREMENTS
--Table of Contents
 
            Subpart B_Post-Event Notice of Reportable Events
 
Sec. 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 
Sec. 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

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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 Sec. 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.