Yellow Submits Final Chapter 11 Plan, Seeks Creditor Deal

Yellow Corp. trucks sit at a facility in Hayward, Calif., in 2023. (David Paul Morris/Bloomberg News)

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Administrators of Yellow Corp. filed a final Chapter 11 plan Sept. 2, laying out proposals for repaying creditors and disposing of the bankrupt less-than-truckload carrier’s remaining assets, according to a court document.

In a separate Sept. 2 filing with the Delaware bankruptcy court, the trustees asked Judge Craig Goldblatt for an extra 60 days through Dec. 30 to win creditor support for the final Chapter 11 plan. They requested a hearing at 10 a.m. EST on Sept. 16 to approve this proposal.

Yellow’s administrators are seeking to settle unsecured claims, including pension withdrawal liability claims, Worker Adjustment and Retraining Notification Act claims and personal injury claims.

The administrators dispute the size of withdrawal liability claims from Central States Pension Fund and other multiemployer pension funds.

In the filing requesting the additional 60 days, Yellow lawyers said most of the plan’s options depend on a ruling requested on the Central States Pension Fund claims, which is under consideration by Goldblatt.

Central States argues the Yellow estate owes the pension fund about $5 billion in contributions because of the company’s collapse and inability to continue payments.

Attempts by various International Brotherhood of Teamster locals and pension funds to seek financial redress are also on hold as a result.

An inability to settle a dispute with the Teamsters, which represented 22,000 Yellow employees, was one reason Yellow shuttered so abruptly at the end of July 2023. Yellow also argued it scared off customers.

Yellow accused the Teamsters of blocking its “One Yellow” reorganization and cost-cutting plan and took the union to court in Kansas, seeking $137 million in damages. The lawsuit was dismissed in March.

Goldblatt ruled Sept. 4 that Teamsters President Sean O’Brien could be deposed as the court seeks to settle up to $244 million in WARN Act claims. Yellow previously said it was unable to issue 60-day WARN Act notices.

Yellow’s secured creditors have already been paid back, including the U.S. Department of the Treasury, which loaned the company $700 million during the COVID-19 pandemic.

Those creditors received the money Yellow owed them following the sale of real estate and rolling stock — auctions that brought in more than $2 billion in funds.

Two rounds of auctions raised $1.88 billion and $82.89 million through the sale of 128 and 23 of Yellow’s owned and leased terminals, respectively. Auctions of ex-Yellow tractors and trailers have since followed.

Goldblatt in August approved a plan that retained real estate broker CBRE to sell 46 owned and 70 leased terminals that remain idle.

Before Yellow’s demise, the company ranked No. 13 on the Transport Topics list of the largest for-hire carriers in North America and No. 3 on the LTL list, behind only FedEx Freight and Old Dominion Freight Line.

Sales of any remaining terminals and rolling stock would continue as part of the final Chapter 11 plan, which also opened the possibility for a reorganization or restructuring, outlined by the administrators in a so-called term sheet.

Under the restructuring, Yellow would have an enterprise value of $1.4 billion after issuing common stock under a $150 million rights offering.

The restructuring would cap claims against Yellow at $750 million. The claims would be paid back through $340 million cash on hand, $300 million in secured notes and the $150 million rights offering.

Major Yellow shareholders MFN Partners, Conversant Capital and Carronade Capital Management would backstop the rights offering.