Yellow Nets Bankruptcy Court Approval of Wind-Down Plan (1)

Yellow Corp., once a US transportation leader, won court approval of its bankruptcy plan following two years of contentious litigation and pension disputes.

Judge Craig T. Goldblatt of the US Bankruptcy Court for the District of Delaware said Monday he will approve the wind-down plan despite objections from Yellow’s largest shareholder, MFN Partners LP, which urged the court to convert the fallen trucking company’s case from Chapter 11 to trustee-run Chapter 7 liquidation.

The bankruptcy plan approval is a major milestone for Yellow, which has been working to sell off assets and address billions of dollars in pension disputes after it filed for bankruptcy in August 2023 amid high costs, rising debt, and stiff competition.

The company has over $600 million in cash, plus proceeds from asset sales and accounts receivable, to implement the plan, pay administrative and priority claims, and cover a liquidating trust’s fees and expenses, according to a Nov. 9 declaration from a managing director at Alvarez & Marsal North America.

MFN said a conversion would cut wasteful costs and allow an independent trustee to handle disputes. It argued that several parties—including an unsecured creditors’ committee, the Central States pension fund, and other creditor groups—are seeking to maximize their own recoveries at the estate’s expense.

But Goldblatt found that the case has already absorbed significant expenses from high-stakes litigation and legal fees, reducing value for creditors, and that a Chapter 7 trustee would likely prolong that litigation for months beyond what a Chapter 11 liquidation plan would require.

After the bulk of the assets were sold in bankruptcy, the remaining value for creditors has continued to decline while litigation has dragged on over “how to divide the pie,” he said.

“I don’t think creditors would be better off with a conversion to Chapter 7,” Goldblatt said.

During the pandemic, Yellow received a $737 million loan to keep the company afloat under the Trump administration, though Congressional investigators later found the company was ineligible. After its default, the company laid off 30,000 workers, sparking litigation with unions and former employees.

More than 10 entities and individuals initially opposed Yellow’s bankruptcy plan, including MFN, the US Environmental Protection Agency, and the Department of Justice’s bankruptcy monitor.

MFN contended that the plan couldn’t be confirmed because it allowed “conflicted members” of the proposed liquidating trust board to control decisions for their own benefit, rather than acting as independent fiduciaries. It also argued that the plan fails the “best interests of creditors” test since it lacks a proper liquidation analysis and grants full recovery to certain unsecured creditor classes at the expense of others.

While Goldblatt concluded that the analysis and testimony contained “problematic” assumptions, the plan would still provide a better recovery for creditors than a Chapter 7.

The judge said that, although there are questions about the trust governance, the plan hadn’t been proposed in bad faith. After reviewing the trust agreement, he found that it has “standard, appropriate protections” addressing certain issues, including conflict of interest.

“I don’t have a blue pencil to revise the trust agreement,” he said. “The only tool I have is to review if it was proposed in good faith.”

Yellow previously avoided Chapter 7 conversion in June after Goldblatt ordered the company to file either an economic settlement plan or a “waterfall” plan within 30 days, saying he would consider converting the case otherwise.

MFN further argued that potential settlements with multiemployer pension plan claimants could disadvantage other creditors and equity holders without independent review.

Yellow and MFN lost a bid in the US Court of Appeals for the Third Circuit in September to overturn a bankruptcy court ruling on pension withdrawal liability in a dispute involving potentially billions of dollars. The court held that Yellow must pay the higher withdrawal liability agreed to with the New York and Western Pennsylvania Teamsters Funds.

Yellow and MFN had asked the appeals panel to find that the liability calculations were incorrect, alleging the figures excluded non-recourse funds the pension plans received from the US Treasury under the American Rescue Plan Act of 2021.

MFN said in its plan objection that it was working with Yellow on a petition to the US Supreme Court challenging the Third Circuit’s ruling and on a reply to their joint objection to the New York Teamsters’ $77 million liquidated damages claim.

MFN is represented by Quinn Emanuel Urquhart & Sullivan LLP and Potter Anderson & Corroon LLP. Yellow is represented by Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP. Groom Law Group Chartered represents the New York Teamsters.

The case is Yellow Corp., Bankr. D. Del., No. 23-11069, hearing 11/17/25.