Yellow's $7.8 Billion Pension Battle To Unfold in Bankruptcy Court

Yellow sought bankruptcy court to tackle its pension fund claims to avoid arbitration. Meanwhile, the Teamsters fended off Yellow's breach of contract accusation earlier this week.

Yellow's $7.8 Billion Pension Battle To Unfold in Bankruptcy Court

Yellow Corp, a former giant in the less-than-truckload shipping world, finds itself in the middle of a large-scale legal battle. The issue? A $7.8 billion in pension fund withdrawal liability claims. Here’s what went down:

Quick Facts:

  • The dispute focuses on whether Yellow should cough up $7.8 billion to pension funds.
  • Yellow wanted the case decided in bankruptcy court, not arbitration.
  • Delaware’s Judge Goldblatt ruled the bankruptcy court will handle it.

Inside the Courtroom:

  • The Stakes: This case is about how much money hedge funds and other Yellow shareholders can expect to see once the bankruptcy dust settles.
  • The Argument: Pension funds pushed for arbitration, banking on that setting to pin down Yellow’s liabilities. Yellow fought to keep the dispute in bankruptcy court, aiming for a potentially more favorable setting.
  • The Decision: The court’s call? Keep it in bankruptcy court. This means a broader audience, including the government’s Pension Benefit Guaranty Corp. (PBGC), can have their say.

Yellow V. Teamsters

To add to the ongoing legal battles for the company, the Teamsters scored a decisive win against Yellow Corp on March 26. The company's $137 million lawsuit, aimed at the union, was thrown out by Judge Julie A. Robinson.

  • The Lawsuit: Yellow Corp. accused the Teamsters of breach of contract, hoping to land a hefty sum.
  • The Verdict: The court dismissed the lawsuit, siding with the Teamsters and labeling Yellow’s move as a baseless PR stunt.
Sean M. O’Brien, Teamsters General President: “After years of corporate mismanagement, Yellow still never misses an opportunity to embarrass itself... This lawsuit represented management’s desperate, last-ditch attempt to save face — and they failed yet again.”

Looking Forward:

As we steer toward an August trial, this case promises to be a test case for how deeply a company’s pension obligations can affect its financial fate and those of its employees. With billions at stake, the outcome could set a precedent, not just for the trucking industry, but for any company juggling bankruptcy and hefty pension promises.

Sources: BloombergLaw | FreightWaves

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