Allen v. Greatbanc Trust Co., No. 15-3569 (7th Cir. 2016)Annotate this Case
GreatBanc, the fiduciary for Personal-Touch home-health-care employee stock ownership plan, facilitated a transaction in which the Plan purchased shares in the company from the company’s owners with a loan from the company itself. It is not clear whether GreatBanc obtained independent advice or a valuation. GreatBanc had been appointed as trustee by the owners. The value of the shares fell until they were worth much less than the Plan paid, leaving the Plan with no valuable assets and heavily indebted to the company’s principal shareholders. The Plan’s participants were liable for interest payments on the loan. Employees filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132. The district court dismissed. The Seventh Circuit reversed. The plaintiffs plausibly alleged both a prohibited transaction and a breach of fiduciary duty.