By Dietrich Knauth
NEW YORK (Reuters) -Yellow Corp has reached settlements with 14 pension plans that had sought over $7.4 billion from the bankrupt trucking company.
The pension plans agreed to take a reduced payment, which will end years of litigation over claims that Yellow cannot afford to pay and allow Yellow’s junior creditors to collect up to $7.4 million from the company’s bankruptcy sales proceeds, according to settlement documents filed Wednesday in Delaware bankruptcy court.
Yellow shut down in 2023 amid a dispute with its main employees’ union, and sold all of its assets in bankruptcy, including shipping terminals, other real estate and its fleet of trucks. Those sales generated more than enough to pay its top lenders and a government-backed COVID-19 pandemic relief loan, but they left other creditors, like the pension plans, fighting to get back a fraction of what they are owed.
The company lost an appeal over the pensions’ claims in September, but even after selling all of its assets, it does not have enough to pay more than a fraction of the asserted claims. The company expects to have between $600 million and $700 million to pay all creditors, including the pension plans.
The $7.4 million that was set aside for junior creditors may be reduced if Yellow Corp ends up with less than $550 million in cash at the end of its bankruptcy, according to court documents.
During its legal battle with the pension plans, Yellow had challenged two Pension Benefit Guaranty Corporation regulations that restricted how employers and pension plans could use pandemic relief funds when calculating employers’ pension liabilities.
On appeal, the Philadelphia-based 3rd U.S. Circuit Court of Appeals upheld the PBGC rules, saying that the agency rules supported the 2021 American Rescue Plan Act’s goals of giving billions of dollars to underfunded multiemployer pension plans and ensuring that the funds were used only to pay retirees or the costs of administering a pension plan.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi; editing by Diane Craft)
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