Yellow Corp Reaches $526M Settlement Over Pension Claims in Bankruptcy

Yellow Corp. has negotiated settlement agreements totaling up to $526 million with four multiemployer pension plans to settle remaining withdrawal liability claims stemming from its insolvency. The compromise has garnered backing from MFN Partners, the defunct less-than-truckload carrier's largest shareholder. If granted approval by the federal bankruptcy court in Delaware, the resolution will conclude extensive litigation that commenced following the company's collapse in August 2023.

Under the proposed terms, the majority of the settlement capital is earmarked for three primary funds: the New York State Teamsters Conference Pension and Retirement Fund, the Western Conference of Teamsters Pension Trust Fund, and the Western Pennsylvania Teamsters and Employers Pension Fund. The New York Teamsters fund is pursuing formal authorization for an individual claim of $300 million. This accord follows earlier resolutions that the motor carrier reached with several other multiemployer retirement funds prior to the latest filing.

Securing court confirmation will permit the estate's liquidating trust to initiate disbursements to general unsecured creditors. Furthermore, outstanding workforce claims associated with accrued paid time off and sick leave have been designated as priority obligations and will be satisfied. As a condition of the consensus, MFN Partners has committed to dismissing its active legal appeals and relinquishing rights to seek reimbursement for certain legal expenses.

The contentious legal battle centered on whether Yellow retained pension withdrawal obligations after federal relief funding supported several multiemployer plans in 2021. Both the carrier and MFN had asserted that those federal subsidies rendered the funds fully solvent, while also questioning the statutory calculation methods utilized by plan administrators and regulatory bodies. The dispute had previously intensified after MFN acquired certain pension claims as a hedge, though legal avenues narrowed after the U.S. Supreme Court declined to review the matter earlier this summer.

The carrier formally ceased operations in mid-2023, dismissing 3,500 nonunion personnel on July 28 followed by 22,000 union workers two days later, before submitting its Chapter 11 petition on August 6, 2023. According to monthly operating disclosures filed for June, the bankruptcy estate retained $593 million in cash reserves after disbursing $293 million in professional expenses since proceedings commenced. Estate representatives noted that entering this settlement circumvents years of protracted legal proceedings and facilitates prompt recoveries for remaining creditors.