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