Yellow Bankruptcy Judge to Reconsider Pension Debt Ruling (1)

Yellow Corp. convinced a judge to reconsider parts of a ruling against the bankrupt trucking company in a dispute over billions of dollars in pension-related liabilities.

Judge Craig T. Goldblatt of the US Bankruptcy Court for the District of Delaware in September held that Yellow was liable to make an accelerated payment of debt it owed for withdrawing from multi-employer pension plans. But the judge found Tuesday that he was incorrect to make that determination, which rested on his finding that the company defaulted.

“The Court is persuaded that it should not have resolved that issue on the incomplete record before it,” he wrote. His order leaves the door open to a revised calculation that would result in smaller pension liability for the company.

The judge late last month indicated to the company and its main shareholder, MFN Partners LP, that he made an error in the earlier ruling. The pension plans have argued that the company owes $6.5 billion in pension obligations.

Goldblatt said he wouldn’t fault the company for not fully raising the default issue until the motion to reconsider.

“The Court is inclined to prioritize its obligation to reach the right answer over the strict enforcement of the discretionary rules of waiver,” Goldblatt wrote. “These issues raise high-stakes questions.”

Now, there are multiple unresolved questions related to how the pension debt should be calculated and whether it should be discounted, Goldblatt said.

Lawyers for the pension plans didn’t immediately respond to a request for comment.

Yellow is represented by Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP. MFN is represented by Potter Anderson & Corroon LLP and Quinn Emanuel Urquhart & Sullivan LLP. The pension funds are represented by Sullivan Hazeltine Allinson LLC and Groom Law Group.

The case is Yellow Corp., Bankr. D. Del., No. 23-11069, 11/5/24.