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.
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James Lawless
Nothing but a pipe dream. Customer base already moved to other carriers. The equipment has been sitting idle and will not just start back up like after a long weekend. Terminals have been sold off. Employees have moved on. They took a 15 % pay cut for ten years and it wasn’t enough. Meanwhile Bill Zollars retired with 7 million while employee’s pay was cut.
Rodger Garton
I don’t know how Jack Cooper can get the money to start a new truck line. They couldn’t even manage Jack Cooper. The employees had to bail them out with pension cuts to buy equipment and then the equipment we got was refurbished old trucks that we are having trouble with now. We can’t even get parts in our shop to fix our trucks because they don’t have money.
Anonymous
What is this lady trying to accomplish ? Yellow Corp is dead, Where is the customer base going to come from ?
Previous comments, Yellow Corporate mismanagement Plus O’Brien’s teamsters bullying all played into the death of the company.
Why didn’t the shareholders sac and realign the corporate structure years ago ???
Timothy Parkhurst
My comment which was 100% factual to the point and published by a real former employee (myself) has been deleted. Why? I got no clue.
Mitchell Yetter
If they honor the seniority at the time they closed, and restored all union employees back to their seniority positions, as well as started to pay into the pension, I may be interested in returning, only if above mentioned items were in place.
Timothy Parkhurst
I’m a former employee. I want my $7700 that they currently owe me. I dont want a stake in the bankrupt company, if I wanted that, I’d buy it!
I personally am curious what this Amico ace is planning on buying. Most of the equipment is gone, most of the terminals have been sold. What exactly are they buying? The signs? The courts disapproved her first 2 bids because she couldnt get her financing together. I say pay us what you owe us, put the mgt team in prison where the belong for driving up the price and cashing themselves out and leaving us hangin. Our WARN lawsuits are most plent valid. You know when I recieved my letter telling me I was losing my job and was laid off? NEVER! I still have yet to receive anything, not even a phone call! I found out we were done on Sat Eve Jul30, whe I was 1 of the last ones back and we were locking up! So quit playing games!
Sleeper Leaper
🤖Teamsters union should buy it🤖and call it Teamsters Freight
ed blaine
yellow is done, very simply pay the men and women what their owed. perferred stock of $20,000, can be worthless almost overnight.