A final Chapter 11 plan for Yellow Corp. includes payments to remaining secured creditors and to former employees who are due paid time off and commissions, a Thursday filing with a federal bankruptcy court in Delaware showed. Yellow has asked the court to approve the voting procedures and timeline for the plan.
Yellow’s (OTC: YELLQ) plan includes full recovery on employee PTO and commission claims, which are projected to total $75 million to $100 million. However, the filing said these claims are “subject to committee review” and exclude claims from employees who agreed to “less favorable treatment.”
In addition to the employee claims, other “unimpaired” claims, or claims projected to be paid in full, include other secured claims (totaling $0 to $405 million), other priority claims ($80 million to $210 million), unsecured claims of less than $25,000 ($25 million to $35 million) and secured tax claims (less than $1 million in total).
General unsecured claims against the estate were marked “impaired,” with two payout projections provided wherein creditors would receive just a pro rata share of their claims. Scenarios ranged from $2.3 billion to $4.7 billion with a projection of no recovery to 16% recovery, and $1.3 billion to $2.7 billion, with a 0% to 26% recovery.
“At this time, the debtors believe that the plan represents the best (i.e., most value maximizing) available option for completing the chapter 11 cases. The debtors recommend that you vote to accept the plan,” the filing read.
The unsecured claims pool includes several large outstanding items that are still being finalized or litigated.
Claims from pension funds are still listed in the billions, with Central States Pension Fund’s claims totaling nearly $5.8 billion, $4.8 billion of which stems from Yellow’s withdrawal from the plan. Similar withdrawal liability claims from other multiemployer pension funds bring the total to roughly $7.5 billion.
After months of litigation, the court ruled last month that Yellow was responsible for withdrawal liabilities, although the calculation outlined by the court implies a settlement much lower than the amounts claimed. If withdrawal liabilities are settled at 50% of the claimed value, Yellow asserts general unsecured claims would be in the $1.3 billion to $2.7 billion range. The higher range ($2.3 billion to $4.7 billion) assumes no reduction.
Pension insurer Pension Benefit Guaranty Corp. also has a $206 million claim triggered by Yellow’s termination of a surviving plan that it once sponsored. The filing showed Yellow’s estimation for the claim to be closer to $177 million.
Worker Adjustment and Retraining Notification Act litigation continues and could result in millions being paid to employees, who claim they were not given a required 60-day notification ahead of mass layoffs last summer. Yellow has asserted several defenses, including “unforeseeable business circumstances” that led to its abrupt shutdown, releasing it from the duty to provide advance notification. That litigation remains ongoing, with Teamsters leader Sean O’Brien scheduled to be deposed on the matter on Friday.
The filing also referenced other claims like an ongoing settlement process for personal injury claims and a $2.13 billion Environmental Protection Agency claim tied to contamination at a Yellow terminal. The filing also showed the company is still trying to appeal its breach-of-contract lawsuit against the Teamsters union. The outcomes of these matters are expected to impact the projected recovery scenarios.
As far as assets, Yellow still has more than 100 terminals and thousands of units of rolling stock left to sell. It has sold off more than $2 billion in real estate and equipment since its liquidation began more than a year ago. Those funds were used to pay all secured debt and bankruptcy fees to attorneys and advisers. The filing said Yellow has more than $350 million in cash currently.
Yellow’s bankruptcy plan calls for a voting deadline of Jan. 20 with results to be released on Jan. 27. Only general unsecured creditors are entitled to vote.
Voting from the other classes was presumed, with the unimpaired classes (secured, priority and employee) likely in favor of the plan as they are expected to receive a full recovery, and the “impaired” classes (like equity holders) “deemed to reject” as a recovery scenario for them is unlikely.
Objections to the plan must be filed by Nov. 14.
Shares of YELLQ were off 56.3% to 14 cents at 2:50 p.m. EDT on Friday .
