YELLOW CORPORATION BANKRUPTCY UPDATE
10/29/2024 - Yellow Corporation and its operating companies (“Yellow”) filed for bankruptcy in the District of Delaware Bankruptcy Court on August 6, 2023. The International Union and TNFINC (the “Union”) have entered an appearance in the case on behalf of Local Teamster Unions whose members hold claims against Yellow’s operating companies—YRC Inc., USF Holland, LLC, New Penn Motor Express, LLC, and USF Reddaway, Inc. Claims filed by the Union include contract claims for vacation pay, sick pay, and other paid time, as well as grievance pay.
Yellow has made significant progress liquidating its assets over the past year. To date, Yellow has sold numerous properties, re-leased or otherwise monetized leased properties, and sold a majority of its trucks and trailers. Yellow paid off its secured lenders, such as the United States Treasury. As a result, Yellow’s only unpaid creditors remaining are unsecured creditors, meaning the creditors hold no lien rights against Yellow’s property. The claims by Yellow’s former employees, including Teamster-represented employees, as well as the WARN Act claims, are unsecured claims. Unsecured claims are paid out after secured claims, and the unsecured claims are paid out in accordance with the Bankruptcy Code’s priority rules, meaning that unsecured claims that have a higher priority under the law are paid before unsecured claims having a lower priority. Finally, by law, unsecured claims that are approved must be paid in full before equity shareholders are paid. Moving forward, Yellow still holds owned and leased properties and rolling stock that must be sold in order to complete the liquidation process.
For reasons stated within the IBT Memorandum, (Click Here to Read the Full Notice) it is unlikely that any payments from the estate will be disbursed to employees during the 2024 year. The Union is hopeful that disbursements from the estate to employees will proceed within the first or second quarter of 2025. The Union believes the coming three months will be critical for the continued progress of the Plan, the ongoing sales of remaining assets, and the conclusion of the litigation matters.
In most bankruptcy cases, employees are not guaranteed a 100% recovery. While the Union has filed proofs of claims with the maximum recovery of employees in mind, the Union cannot guarantee a 100% repayment to employees on 100% of employees’ potential claims. The sale process has succeeded in garnering a surplus beyond Yellow’s secured debt, the claims of unsecured creditors are greater than Yellow’s expected final estate value. A portion of employee claims based on unpaid wages, including vacation and sick pay, are considered priority claims. Priority claims are guaranteed repayment 100 cents/$1.00 only up to and not exceeding $15,150.00. Non-priority employee claims, or employee claims in excess of $15,150.00, will be paid on a prorated basis, depending upon the total estate value and the total unsecured claims remaining. It is likely that any repayment employees receive (based on unpaid wages, as well as WARN Act damages) will be taxed as wages, including applicable state and federal withholdings.
Click Here to Read the Full Notice, which includes updates on the following:
I. MEMBER WARN ACT CLAIMS
II. MULTI-EMPLOYER PENSION PLAN LITIGATION
III. PLAN PROCESS
IV. IMPORTANT CONTACT INFORMATION REMINDER
Members should keep their addresses updated with their applicable Local Teamster Union (Local 492). Estate disbursements will go directly to the individual employee, requiring either Yellow or the IBT to have the most recent accurate address on file of members.
Click Here For Previous Yellow Updates
Fraternally,
Tracy McCarty,
Teamster LU492 Freight Business Agent, including ABF, T-Force and Yellow.
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