Yellow Corp.’s creditors are prepping to submit an alternative Chapter 11 proposal that would split up the defunct trucking company’s remaining $550 million in cash and put the long-running bankruptcy case to bed.
Two of Yellow’s biggest pension funds, including the Teamsters-affiliated Central States Pension Fund, have reached a deal with a creditors’ committee to come up with a new plan by the end of the week, lawyers told a Delaware bankruptcy court on Monday.
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The newest plan comes as the pension funds and creditors remain at odds with Yellow’s estate over the distribution of its remaining assets, further delaying payouts to former employees and creditors alike. None of the bankruptcy proposals offered so far have garnered sufficient creditor support to proceed.
Yellow officially filed for bankruptcy in August 2023, a week after the less-than-truckload (LTL) provider ceased operations. But the time since has been dominated by litigation that has been costly for those involved. Committee attorney Meredith Lahaie said last year that Yellow’s bankruptcy was costing roughly $20 million a month, indicating the estate was wasting time fighting the various pension claims instead of settling the disputes in court.
Yellow’s bankruptcy advisors received the proposal Friday, and are still reviewing the deal, according to the company’s lead counsel Patrick Nash.
No details have been made public and the proposal has not yet been shared with the company’s biggest shareholders, including largest investor MFN Partners.
According to Nash, Yellow will try to compromise. “Any plan we move forward with that isn’t supported by MFN and [others] is going to be hotly contested and it’s going to be heavily litigated,” he added.
“I don’t know that I can tell you that I am” optimistic, Nash told U.S. Bankruptcy Judge Craig Goldblatt during the hearing. “But I’m not pessimistic either.”
Some parties are more pessimistic, particularly pension funds that feel they have been on the outside looking in to the committee’s proposal.
“A sufficient majority are getting together, trying to come up with something that they’re then going to try to impose on the not-cool kids, if you will—the people who are not in those negotiations,” said Andrew Leblanc, a partner at restructuring law firm Milbank Group, which represents six other pension claimants.