The venue for deciding the fate of $7.2 billion in pension withdrawal liability claims against bankrupt Yellow Corp. will be decided on March 6, a Wednesday status hearing in a Delaware court determined.
Previous court filings have shown as many as 20 different multiemployer pension plans (MEPPs), including Central States Pension Funds, have laid claim to the estate. The MEPPs and Pension Benefit Guaranty Corp. (PBGC), a pension insurer that is overseeing roughly $80 billion in special financial assistance (SFA) allocated by the American Rescue Plan Act, have said the matter should be decided by arbitrators.
Yellow contends the claims should be litigated in bankruptcy court and that making it fight the claims in 20 different venues would leave the estate’s unsecured creditors footing the legal bills. However, counsel for Yellow said at the Wednesday hearing that there were just 11 MEPPs party to the claims.
A main point of contention has centered on the existence of unfunded vested benefits (UVBs).
PBGC said, within its authority granted by Congress, it enacted a rule that requires MEPPs to recognize the SFA distributions over time, meaning there are pension withdrawal liabilities in this case. It said doing otherwise would create a shortfall for pension funds as most employers would seek an early exit from the plans.
“If a plan immediately recognized the entire amount of SFA as an asset, its UVBs would immediately decline, and so too, generally, the prospective withdrawal liability of contributing employers,” the PBGC said in a January objection. “Contributing employers could withdraw immediately with vastly reduced withdrawal liability.”
However, the estate said the MEPPs are now fully funded and there are no UVBs, meaning there is no liability. It said even if there were valid claims, the amounts due are “far below $1 billion,” as the funds have submitted duplicate claims, didn’t apply relevant caps and didn’t discount the liabilities to present value.
The estate said the claims represent a “double recovery” for the MEPPs and a “windfall at the expense of shareholders,” which include taxpayers.
The U.S. Treasury received a 30% equity stake in Yellow in 2020 as part of a collateral package for a $700 million COVID-relief loan. The estate repaid that debt, including $151 million in interest due, last week.
A separate filing showed that all secured creditors and holders of the estate’s bankruptcy financing have been repaid, using nearly $2 billion in proceeds from real estate auctions. The estate now has $300 million in cash and has started the process of settling unsecured claims.
A Monday court document showed Knight-Swift Transportation (NYSE: KNX) will add an additional 10 terminals from the defunct less-than-truckload carrier’s portfolio. The leased properties are valued at $2.2 million and will complement the 15 terminals it acquired for $52 million at the first two auctions last year.
The company said on a Jan. 24 call discussing fourth-quarter earnings that it was eyeing the sites. In total, the carrier could add roughly 35 service centers in 2024 as it builds out a national terminal network after buying two regional carriers in 2021.
Yellow has also asked the court to allow it to assume 78 terminal leases of the 108 leased properties remaining in the portfolio. It said a marketing process of the locations suggests “hundreds of millions of dollars” in proceeds. It still has between 30 and 40 owned properties that it is trying to sell.
Yellow, PBGC and the MEPPs agreed on Wednesday to a court schedule for litigating the withdrawal liability claims. If the bankruptcy court decides to hear the case, a trial on the matter would take place in August.
Central States’ withdrawal claims total $4.8 billion. It received $35.8 billion as part of the government’s rescue plan.
Walter J Johnson
Central States are incompetent YRC, the and the entire upper management team are incompetent, crooks who found away to destroy a once proud company, and several other’s that the brought Along the way. I don’t understand why Both organized crime organizations aren’t being investigated, Crime does pay and it pays very well.
Ron Moran
I was to months shy of 41years at yellow was told back 2008 to vote to save the company from bankruptcy I had over 30 years paid in at class 18 witch paid 3 thousand a month after that pay cut I was reduced to class 17 This was not expected or brought to are attention until after the vote had to work extra 11 years to get approximately a 25 year pension had nothing to do with company surviving
Danny Clark
I am like many others, my pension check is around a thousand dollars less than it should be for 15 years of service wages and bonuses were paid out to company employees yet yrc said they couldn’t make pension payments so we all took wage cuts and allowed them to pay a portion of pension contributions. Everyone at the top has done nothing but make money while the teamsters foot the bill! They all should be held accountable and have to pay back what they stole
Lance
What a crop of crap Central States should be entitled to ZERO. All other claims should be first in line. Central States is the most corrupt pension and health & welfare in the world and we along with other claimant’s are supposed to get our settlements after them.
Steve
I know everyone is concerned about the pensions, but I wonder if anyone is checking into the medical benefits for the 23 thousand teamster employees. If I remember correctly, after 3 months of inactive service the benefits stop. So who else other than the international in Washington D.C. are having their medical costs covered? Makes you wonder.
Michael trout
I tried telling all the cowards to vote no on pension cuts and pay cuts, and that yellow would continue to make millionaires out of losers, everyone who voted YES is getting what they deserve, WE should have said no and told yellow to pay us and our pension, because it would have been the same outcome, but at least we would have gotten ours instead of millionaires getting more, you got what you deserve
Francis w Gallagher
Who ever is in charge of the central states pension should be in jail. They don’t know how to manage money. The Government had to bail them out and of course the democrats just threw money at the problem and didn’t fix it.
Justin succu
Yellow is full of crap they wanted to get out of business they knew they had too much in debt and they wanted to screw the union and the workers because they couldn’t get what they wanted 3 months before they closed their doors all the top executives got paid a couple of million dollars in bonuses why should we suffer when the top guys get paid I have a question with this so-called merger would everybody get hired back in the New York area that work for New Penn motor Express and yellow in the New York tri-state area with everybody get hired back that worked at New Penn and yellow in the New York area