Yellow, Pension Funds' Claims Battle to Extend Through Q1
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Settlement of around $6.5 billion in claims against bankrupt less-than-truckload carrier Yellow Corp. is now unlikely before February at the earliest, according to court filings.
Oral arguments on dispositive motions related to the claims by 11 pension funds are now set to take place at a Jan. 28 hearing at the Delaware Bankruptcy Court, according to a Dec. 12 filing.
A dispositive motion is a pre-trial motion seeking to dismiss a case or a summary judgment, in which the judge will decide what the acceptable facts are, or whether a case is strong enough.
After the Jan. 28 hearing, Judge Craig Goldblatt and the two sides — Yellow’s administrators are battling multiemployer pension plans led by Central States Funds — will schedule a final pre-trial conference, exchange witness and exhibit lists, a pre-trial order, submission of pre-trial briefs and finally the trial.
Hearings were previously scheduled for Dec. 16 and then Jan. 13, with postponements taking place Dec. 6 and Dec. 12.
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Throughout the fall, whether the administrators would have to find multibillion-dollar sums to pay these unsecured creditors was unclear.
The funds argue Yellow must pay a “withdrawal liability” for stopping paying into the retirement plans.
Backing for the funds’ position also came from the Pension Benefit Guaranty Corp., a retirement fund regulator, which expected other corporations with traditional pension plans to be encouraged to cancel their own plans if Yellow won as the cost would be much lower to shareholders.
Yellow’s administrators — and MFN Partners, the company’s largest shareholder — argued that because the funds received billions of dollars in Special Financial Assistance under the American Rescue Plan Act, the liability assessments should be much lower.
If the administrators’ and shareholders’ position received Goldblatt’s backing, then MFN was more likely to receive a return on its investment in Yellow. MFN Partners bought up more than 40% of the carrier’s shares for less than $23 million in the run-up to Yellow shutting its doors.
However, Goldblatt ruled in favor of the funds, first on Sept. 13 and again on Nov. 12, although on Nov. 5 he raised the administrators’ and MFN’s hopes by saying his September ruling contained an error and may need to be reversed.
As a result, proceedings over the elevated withdrawal liabilities are set to ramp up, as are Worker Adjustment and Retraining Notification Act claims.
Lawyers representing unionized employees are seeking up to $244 million in claims. Yellow previously said it was unable to issue 60-day WARN Act notices.
A trial on the WARN claims currently is scheduled for Jan. 21-23. The employees also are considered unsecured creditors.
Yellow’s secured creditors already have been paid back, including the U.S. Department of the Treasury, which loaned the company $700 million during the COVID-19 pandemic.
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Those creditors received the money Yellow owed them after the sale of real estate and rolling stock — auctions that brought in more than $2 billion in funds.
Richmond, Va.-based Estes Express Lines and R+L Carriers affiliate Ramar Land Corp. added to those funds in recent days, agreeing to pay a combined $192.5 million for eight owned properties and four leased terminal sites, according to a Dec. 10 court filing.
The Estes and Ramar deals were carved out of an ongoing third real estate auction. Including the 12 properties, a total of 47 owned terminals and 65 leased properties with more than 3,100 and 4,000 doors, respectively, were on offer in the auction. The 304-door, 51.2-acre Maybrook, N.Y., facility that Ramar bought was the second-largest owned property available in the auction.
The binding bid deadline for the remaining facilities is Jan. 6. An auction of the remaining properties will be held Jan. 13-15.
