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As the Yellow Corporation continues to give away real estate assets and vehicles, what remains of the less-than-truckload (LTL) company is battling its former pension fund over a $6 billion compensation claim.
Shortly after Yellow filed for Chapter 11 bankruptcy in early August, administrators of the Central States Pension Fund (CSPF) announced that approximately $4.8 billion (because Yellow was no longer contributing to the fund) It has filed 45 requests asking the court to recognize withdrawal debts. An additional $900 million in guaranteed participation will be provided.
The trucking company dismissed the claim last month, but Mr. Yellow’s lawyers said the federal government had already bailed out the pension plan for $35.8 billion in early 2023, meaning that major pension funds could save hundreds of millions of dollars from the company’s bankruptcy sale. said that they should not be allowed to receive it.
“This is ‘free money’ that CSPF does not need,” Yellow’s lawyers wrote. “The CSPF cannot punish debtors or recover hundreds of millions of dollars in unearned damages.”
Sourcing Journal reached out to Yellow and Central States Pension Fund.
In response, the Teamsters’ pension fund asked a federal court for permission to use arbitration, rather than bankruptcy court, to pursue the pension obligations allegedly owed by the Yellows.
The fund alleges in a filing with Delaware Bankruptcy Court that Yellow’s efforts to avoid liability are an incentive to maximize returns for hedge fund MFN Partners, which owns nearly 43 percent of the company’s stock. did.
“By objecting to that, [fund’s] The claim is that the debtor is not promoting the restructuring of the company, creating or preserving jobs, or paying hard-earned pension benefits to the debtor’s former employees, but rather the hedge fund MFN and It only aims to ensure that its investors receive huge profits. payments,” the fund wrote. “This court should not be complacent with the efforts of debtors and the wealthiest.”
Additionally, Central States alleges that Yellow is in violation of its collective bargaining agreement and other contracts it has signed related to pensions by failing to make payments. The fund also claims that if it breaches the terms of the agreement, it is entitled to damages equal to 113 months’ worth of payments.
Lawyers for Mr. Yellow argue that major pension funds should not be allowed to receive hundreds of millions of dollars from the company’s bankruptcy sale because the federal government bailed them out for $36 billion earlier this year.
The trucking company’s legal team argued that the more than 40 claims filed by the Central States Pension Fund are “clearly massive and unreasonably exaggerated” and should be thrown out.
At the very least, Yellow’s lawyers argue that Judge Craig Goldblatt significantly narrowed the scope of the middle state’s request because the pension plan was the result of relief from the Pension Guaranteed Benefits Corporation (PGBC), which was affiliated with American Rescue. It says that it should. Planning law.
PBGC lawyers countered that Yellow was wrong to characterize this relief as waiving debt obligations for companies participating in multiemployer pension funds.
Additionally, the PBGC’s legal team said Yellow’s challenge to Central States’ claims amounted to “an effort to persuade the courts to ignore legally enforceable PBGC regulations.”
A hearing on the motion is scheduled for February 14th.
The Central States Pension Fund played a role in Yellow’s bankruptcy, initially suspending $50 million in worker benefits and pension reserves for union employees after the trucking company failed to pay into the fund.
The missed payments prompted the Teamsters to ramp up their rhetoric about going on strike, ultimately leading to more companies diverting cargo from LTL.
But while the strike was eventually called off after the pension fund agreed to extend benefits, it was too little, too late for Yellow. Yellow Inc. ceased operations on July 30 and filed for bankruptcy within the week.
Yellow was able to find housing for more leased terminals earlier this month as the pension dispute drags on.
On January 12, the trucking company received approval to sell 23 auctioned lease terminals for a total of $82.9 million. Rival trucking company Estes Express Lines was the largest buyer in the asset sale, taking over five leased properties for $35.3 million.
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