A federal bankruptcy judge in Delaware admitted Monday to making a mistake in a September opinion regarding the treatment of roughly $6.5 billion in withdrawal liability claims against Yellow Corp. The prior ruling sent the defunct less-than-truckload carrier’s stock spiraling last month as shareholders came to grips with the notion that pension claims would likely see more than just the fractional recovery once thought.
Judge Craig Goldblatt’s initial opinion incorrectly asserted Yellow was in default prior to its August 2023 bankruptcy filing. The timing of the default could determine if the claims are due in full or are subject to a 20-year cap and discounting to present value. Goldblatt’s initial take was that the company’s default had accelerated the amounts due without the need for discounting.
He instructed counsel for both parties to submit written arguments, noting he couldn’t provide a decision until the timing of the default can be determined. The matter could ultimately be taken up at a later trial date.
Shares of Yellow (OTC: YELLQ) jumped 78% to 80 cents per share halfway through the Monday hearing before closing the day up 31%. The stock tanked nearly 90% from $5.20 to 60 cents the day Goldblatt’s initial ruling was announced.
Yellow’s largest shareholder, MFN Partners, joined Yellow’s counsel in arguing against the initial ruling. The Boston-based private equity firm, which also provided bankruptcy financing to Yellow, acquired a more than 40% equity stake in the company in the days ahead of its July 30, 2023, closure.
MFN and its affiliate Mobile Street Holdings have come under scrutiny from pension funds holding claims against the estate. Mobile Street recently purchased withdrawal liability claims from two separate pensions, placing it in an “irreconcilably inconsistent” position where it is now also fighting against the claims that it owns, the funds contend.
The pension funds said MFN attempted to conceal the claims purchases from the court by using an affiliate.
The Monday update from the court likely further delays a final Chapter 11 plan Yellow put before the court earlier this month. That plan, which outlines likely recovery scenarios for all classes of creditors, was initially held up for the Sept. 13 opinion deciding how the withdrawal liabilities would be treated.
The court also heard summary judgment motions regarding Worker Adjustment and Retraining Notification Act claims against the estate on Monday. However, Goldblatt deferred a ruling until the scheduled Dec. 9 trial date.
Steve
A couple of things. First of all if Yellow has to pay the pension fund will the fund reimburse the federal government for the billions of dollars Biden gave them. Second how can the company be held under the Warn act when for months they told the union that if they didn’t get the change of ops they could not stay in business. I wonder how many of the 23,000 union members found new jobs. If they went to work for any non union carrier they will be doing what they refused to do for Yellow. Road men work the dock at non union carriers when they are on short turns. I would be surprised if any non union carrier would hire any of the Yellow employees.. who needs that problem.
Ted Alopogianis
32 years at yellow for what??? Laid off with NO NOTICE !!!! No pay. Attorneys fighting for table scraps from the King’s table. Employees should have been paid first!!!!!!!!
P.S. MARK YOUR AN IDIOT!!!!!!!
Julius
We all sacrifice for yrs for a corrupt company in hope that something will happen to clean up the mess yellow created. I worked at Holland that yellow over bidded on against UPS to be top dog in LTL and over paid for a company they couldn’t afford. They are liable for everyone that lost their jobs 2023 due to misleading and mismanagement of our lives. Doesn’t matter what Obrien said or did both are liable for our loss.
Mark
The company owes neither the Teamsters nor the employees anything. The Teamsters got their money from the government and that was due to the mismanagement from the Teamsters pension fund. How can anyone in their right mind expect a company to carry orphans and pay for their pensions. As far as the Warn act is concerned, not sure how the company can give notice when they could not get the loans to stay in business. As far as your job is concerned, the company had meetings after meetings with the employees and told them to get Obrien to the table and he flipped us off and posted a picture of a tombstone. He is a joke and as time goes on most folks will realize that the unions are a dying breed and will whither away. I don’t feel sorry for any of the union employees. They laughed and said shut it down and we did. The grass is rarely greener on the other side as you now know.
Christopher C Faille
Todd, did the judge create a paper trial for this admission? or are you merely reporting on his comments from the bench to the assembled lawyers? If the latter: did you have someone there or is this second hand?
Steve
Yellow failed to pay off Judge Goldblatt before his initial ruling. After Yellow offered up the appropriate dollar amount to the judge, the judge suddenly realized his mistake on the initial ruling. Wow!
Richard Davis
Judge Craig Goldblatt admits to making a mistake in his prior ruling on $6.5B pension claims. Yellow stock tanked nearly 90% from $5.20 to 60 cents the day Goldblatt’s initial ruling was announced. Now! He says he made a mistake after billions were lost, which sounds like because of his ruling. Judges’ jobs are to rule on other people’s errors or mistakes. Those people have to pay for their mistakes. So why shouldn’t someone have to pay for this judge’s mistake?
Mike
The workers are the true victims here! We lost billions in pension funds that won’t be paid! We lost hundreds of millions in wages and hung in hoping for a miracle that the company could pull out of this. We almost thought it would. Instead we were left holding the bag. Most of us lost half our pensions. 30 or more years wasted and flushed away chasing a full pension that we will never see. Now we are working jobs making less then what we were use to living on and those are the lucky ones who found work. Now we wait to see if we will ever get any justice and the lawyers just keep trying to chop our legs out from under us further and further. Each and every one of us deserves that WARN act money! Each and everyone of us deserves to see that pension money returned to its rightful owners us the employees. We fought and sacrificed to keep this company alive only to walk away empty handed and to now watch this unfold. Do the right thing judge! Give us the ones who sacrificed everything some justice!