Dive Brief:
- Yellow Corp. has secured settlement agreements that will reduce payouts by billions of dollars, according to a bankruptcy filing last week.
- Deals with 14 claimants would reduce requested payouts from $7.4 billion to less than $1.5 billion, according to grouped appendix figures presented in the filing.
- The company, which filed for bankruptcy in August 2023, asked a judge to approve an order that would require pension plans to collectively contribute up to $7.4 million to minimize impacts on other creditors.
Dive Insight:
The settlements, if approved, seek to avoid costly and lengthy litigation that could continue for years, further freezing retirement money owed to Teamsters pension funds.
The deals are independent of each other, helping Yellow continue with progress on its Chapter 11 bankruptcy case that began over two years ago.
A court hearing on the matter is expected Dec. 18. Parties have until 4 p.m. EST on Dec. 11 to file objections.
The Central States, Southeast and Southwest Areas pension and health funds have claims totaling more than any other group — at $783.5 million.
The pension fund, tied to the Teamsters, says it was 98% funded as of Jan. 1, 2023. But Yellow businesses made a complete withdrawal on July 23, 2023, according to the fund’s group manager.
Other lead groups include Teamsters pension funds out of New York and New England, which have claims totaling $326.7 million and $213.8 million.
Yellow employed some 22,000 Teamsters but said the union ruined its network overhaul plans that were needed to compete against non-unionized LTL carriers.
By liquidating assets, Yellow landed over $2 billion from sale proceeds. But the company might only have $600 million of cash on hand when the $7.4 million assistance is needed, according to the filing.
