A going concern bid for the remaining assets of bankrupt Yellow Corp. appears to be back on the table. A ballot sent to local union heads asks members to agree to settle their WARN Act claims against Yellow with the acquiring company, Next Century Inc. The plan would swap the claims for equity in the startup and potentially recall as many as 14,000 former Yellow workers.
Next Century was formed by Sarah Amico, executive chairperson at car hauler Jack Cooper. She previously led two separate efforts to acquire Yellow as a going concern, following the company’s bankruptcy filing in August. The latest offer was rebuffed by Yellow in December.
The ballot, a copy of which was obtained by FreightWaves, references all Yellow operating companies — YRC, New Penn, Reddaway and Holland. If the plan is approved, the Teamsters union would be able to settle the claims on behalf of its members, “contingent on them [Next Century] acquiring assets of Yellow Corporation as [a] going concern.”
The claim was brought against the estate on behalf of workers after Yellow filed for bankruptcy. It alleged the company failed to notify employees 60 days in advance that they were being terminated.
Yellow has maintained in court filings that it was trying to save the business but that conditions deteriorated quickly, leaving it little time to make the required filings. Court documents have shown Yellow’s shipments declined rapidly in the days leading into a planned strike by workers over the company’s missed benefits payments. The strike was ultimately averted when plan administrators agreed to extend health care benefits for employees, but by then the damage was done.
In lieu of their claim against the estate, employees would receive $20,000 in preferred shares with a coupon rate of 7%. Employees not getting hired back by Next Century would have the right to convert those shares to a $9,250 note, which would be repaid in seven installments by the new company, starting in September and ending March 2025.
The vote would not impact priority claims employees have for items like vacation and sick pay.
Sources close to the matter said a Teamsters freight local in Georgia met with drivers from Holland on Saturday to access member interest.
An integral part of Amico’s prior offers included extending the maturity date on a $700 million COVID-relief loan made to Yellow in 2020. Next Century would have assumed that debt as part of a larger financing package to fund the acquisition. Some senators supported the plan, which aimed to rehire roughly 15,0000 of Yellow’s 22,000 Teamsters employees.
Yellow announced Monday it had repaid the $700 million loan along with $151 million in interest. A Thursday filing with a Delaware bankruptcy court showed it had repaid all secured creditors, including the holders of its bankruptcy financing using proceeds from two terminal auctions, which netted nearly $2 billion.
Yellow’s estate is now working to settle unsecured claims, which include pension withdrawal liability claims totaling more than $7 billion, the WARN Act claims and more than 200 personal injury claims.
Through court filings, Yellow has contested the amounts of the withdrawal liabilities, saying that any amount due would be “far below $1 billion.” It claims Central States Pension Funds and other multiemployer pension funds it contributed to are now fully funded following more than $80 billion in distributions from the American Rescue Plan Act of 2021.
It has also said the WARN Act claims are invalid given the company’s sudden closure. A dispute resolution process has been established to settle the injury claims.
An omnibus hearing scheduled for Wednesday is expected to shed light on the status of several of these items.
No update has been provided on the sale of Yellow’s 46 owned and 118 leased terminals, many of which Amico presumably is attempting to purchase. The estate is also in the process of liquidating roughly 12,000 tractors and 35,000 trailers.
Details on Amico’s new financing plan have yet to emerge.
Sources said Yellow and one adviser to the creditors are opposed to the deal. They also said Amico has garnered written letters of support from some large potential customers.
Next Century, the Teamsters and Yellow hadn’t responded to requests for comment at the time of this publication.
Hindsight 20/20
Our WARN ACT claim is invalid….. Listen to their words, look back. The west took the “Change of Ops” since there was nothing to loose (except the language of the mentioned). They proceeded to move on with their “One Yellow” but we on the west stayed vocal with our brothers in the Mid-west and East. Remember the meetings…. Call our leaders get to the table. Instead of your typical strong arm tactics, thats when you should have been following through with LAW and moving forward with WARN. Don’t believe their narrative. Teamsters stuck to the letter and “The Contract” that YRC approved and then wanted to change…
Sick of Sean's game
This is Sean O’Brien last ditch attempt at getting out of the $150 million dollar lawsuit filed against the international for his hand in sabotaging this company into failure. Now he is trying to screw the members again by not telling them that this new entity will not honor your company seniority, will not take you back at top scale and will not restore the pension to 100%. Basically he is going to allow this new company to have everything he stopped Yellow from having and shut them down for. So this is just one big sham!!!! Vote no to this new proposal and don’t let him get away with screwing the members again!
Sammie Collins
The Teamster Union did not screw these workers we did our part over 15 years of give back to only be screwed by company management who didn’t know how to run a company so before you start blaming the union get your facts straight
Ms know it all
The failure of the company was not fast. Had been in decline for more than a year. Terminal employees ordering supplies like toilet paper had to go through a vice President for a year for permission. Those who worked the Bill’s daily saw an ever increasing decline in freight quantities for over a year. We were already mostly empty few calls daily bols coming in propped from hundreds to tens. They told anyone questioning it, it was just due the adjustment of the new system. Keeping us there knowing it was just to assure dockscwere empty when they pulled the plug
Nick Deieso
It’s a disgrace how the employees were treated and screwed over by yellow and the union I’ve been a teamsters since the early 80s and my advice to the younger generation is don’t trust or believe anyone associated with the new executive teamsters from Sean Obrien on down they only care about their big FAT PAY CHECKS Anyone who wants to contact me feel free to do so
Paul Sands
“The Teamsters Union screwed these workers”??? NOT EVEN CLOSE TO THE TRUTH!! The Company screwed them selves and ALL their work force members with their gross mismanagement!! Get your facts straight!!
Robert Yellin
This disaster with Yellow is nothing more than a trainwreck in the works . Attention all Teamsters , this a disaster in the making . Forget it . Just pay us our money . Shares of a start up will get you nowhere . While I’m here this Tod Maiden has done nothing more then to show how he is an anti union journalist. He does nothing but say negative things about any Union carrier. He has no trucking experience other than finance .
Daniel Miller
Hey zippy is was yellow that screwed the workers by stealing and lying to them and their bankers help they walked away with the money regardless if it’s ever reopened tell the truth