House File 2171

                                       HOUSE FILE       
                                       BY  ALONS


    Passed House,  Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act to exempt a successor employer from the assumption of a
  2    bankrupt predecessor's unemployment contribution rate.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 5671HH 80
  5 kk/gg/14

PAG LIN

  1  1    Section 1.  Section 96.7, subsection 2, paragraph b,
  1  2 unnumbered paragraph 1, Code Supplement 2003, is amended to
  1  3 read as follows:
  1  4    b.  If an enterprise or business, or a clearly segregable
  1  5 and identifiable part of an enterprise or business, for which
  1  6 contributions have been paid is sold or transferred to a
  1  7 subsequent employing unit, or if one or more employing units
  1  8 have been reorganized or merged into a single employing unit,
  1  9 and the successor employer, having qualified as an employer as
  1 10 defined in section 96.19, subsection 16, paragraph "b",
  1 11 continues to operate the enterprise or business, the successor
  1 12 employer shall assume the position of the predecessor employer
  1 13 or employers with respect to the predecessors' payrolls,
  1 14 contributions, accounts, and contribution rates to the same
  1 15 extent as if no change had taken place in the ownership or
  1 16 control of the enterprise or business, unless all of the
  1 17 following apply:
  1 18    (1)  The predecessor employer is a debtor in bankruptcy
  1 19 subject to an order of relief under Title 11 of the United
  1 20 States Code or a comparable order under federal, state, or
  1 21 foreign law governing insolvency.
  1 22    (2)  The sale or transfer occurs by order of a court of
  1 23 competent jurisdiction within debtor proceedings.
  1 24    (3)  A majority of the ownership interests of the successor
  1 25 employer are possessed by residents of this state or possessed
  1 26 by a business entity the majority ownership interests of which
  1 27 are also possessed by residents of this state.
  1 28    Such a successor employer of a bankrupt predecessor
  1 29 employer shall initially pay contributions at the applicable
  1 30 rate specified in paragraph "c".
  1 31    PARAGRAPH DIVIDED.  However, the successor employer shall
  1 32 not assume the position of the predecessor employer or
  1 33 employers with respect to the predecessor employer's or
  1 34 employers' payrolls, contributions, accounts, and contribution
  1 35 rates which are attributable to that part of the enterprise or
  2  1 business transferred, unless the successor employer applies to
  2  2 the department within ninety days from the date of the partial
  2  3 transfer, and the succession is approved by the predecessor
  2  4 employer or employers and the department.
  2  5                           EXPLANATION
  2  6    This bill relates to the unemployment contribution rate of
  2  7 an employer who purchases or merges with another business.
  2  8 Under current law, the successor employer must assume the
  2  9 contribution rate of the business which the successor is
  2 10 purchasing or with which the successor is merging.  The bill
  2 11 provides that if the business being purchased or merged is a
  2 12 debtor in bankruptcy court, and the purchase or merger occurs
  2 13 as part of the bankruptcy proceeding, and the successor is
  2 14 primarily owned by residents of Iowa, then the successor shall
  2 15 not assume the predecessor's contribution rate but rather pay
  2 16 the rate applicable to an employer newly subject to Code
  2 17 chapter 96.
  2 18 LSB 5671HH 80
  2 19 kk/gg/14