Dive Brief:
- A bankruptcy judge blocked three settlements with Yellow Corp. pension plans Thursday, giving a hedge fund the high ground in a drawn-out battle over how much retirement money is owed.
- The New York Teamsters and two New Jersey pension plans, one for the Teamsters and another for the International Longshoremen’s Association, had settlement amounts that exceeded permissible caps, the federal judge found.
- Anticipating an appeal, the federal court’s decision explicitly laid out background in the case for an appeals court.
Dive Insight:
The dispute centered on whether the New York Teamsters was able to receive $75.7 million in liquidated damages, based on a related claim of $757.2 million.
But parties in the case agreed to a different methodology for calculating a withdrawal liability claim, which came to $250.8 million, and fund policies restrict liquidated damages to 10% of that, the opinion wrote.
“Accordingly, the proposed settlement cannot be justified as reasonable and cannot be approved,” Bankruptcy Judge Craig Goldblatt wrote.
Hedge fund MFN Partners, which had more money invested in Yellow than the U.S. government, was objecting to the payout settlements. MFN and a subsidiary were arguing that proposed settlements overpaid the pension plans.
The amounts for the other pension plans under dispute involved about $8 million more than what they were eligible for, per the decision.
Aside from those three blocked settlements, the decision paves the way for other awards amounting to over $1 billion to pensioners from the New England Teamsters to the Central States fund.
