Yellow Corp Settles Pension Claims

Yellow Corp has come to an agreement with 14 pension plans that were pursuing over $7.4 billion from the company, which has been in bankruptcy.

Recent documents filed in Delaware Bankruptcy Court reveal that the pension plans will accept lower payments, thus resolving years of disputes regarding Yellow’s financial capacities. This settlement also allows junior creditors to potentially recover up to $7.4 million from the company’s bankruptcy sale proceeds.

The trucking company, which shut down in 2023 following conflicts with its main employee union, sold all its assets—like shipping terminals, real estate, and its truck fleet—during bankruptcy. Although these sales generated sufficient funds to satisfy large financial institutions and government pandemic relief loans, it left pension plans and other creditors struggling to reclaim their debts.

Despite selling all assets, Yellow lost an appeal regarding its pension claims in September and still lacks enough money to cover all claimed debts. The company estimates having about $600 million to $700 million available for all creditors, including pension plans.

The $7.4 million allocated for junior creditors could decrease if Yellow ends its bankruptcy proceedings with less than $550 million in cash, as outlined in the court documents.

In its legal fight with the pension system, Yellow contested two regulations from the Pension Benefit Guaranty Corporation that dictate how employers and pension plans can use pandemic relief funds while calculating pension liabilities.

The Philadelphia-based Third Circuit Court of Appeals supported the PBGC rule during the appeal, stating it aligns with the goals of the American Rescue Plan Act of 2021, aimed at providing significant funds to struggling multiemployer pension plans, ensuring those resources are directed solely towards retiree benefits and operational costs of pension plans.