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