Yellow’s Chapter 11 Bankruptcy Plan Clears Court, Top Shareholder Appeals Ruling

Yellow Corp.’s long-running bankruptcy saga may finally be turning a corner after a federal judge approved the former trucking giant’s Chapter 11 liquidation plan—an essential step toward wrapping up one of the transportation industry’s most sprawling collapses.

In a Delaware bankruptcy court Monday, Judge Craig Goldblatt issued an oral decision confirming Yellow’s plan, which is the fourth iteration put forward since the carrier filed in August 2023.

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Goldblatt determined that while the plan has its flaws, it delivers stronger recoveries for creditors than the alternative favored by MFN Partners, the hedge fund holding 42.5 percent of Yellow’s equity. The asset management firm appealed the ruling Tuesday, meaning the proposal still has one final legal hurdle before it can go into effect.

MFN has argued for months that the case should be converted to a Chapter 7 liquidation overseen by an independent trustee. But Goldblatt warned would reignite entrenched disputes, prolong the case by up to two years and reduce creditor payouts by as much as $50 million.

The judge estimated Yellow’s remaining assets at $650 million to $700 million, and he pointed to the estate’s monthly professional fees—around $3.5 million—as a major reason an extended timeline could erode value.

MFN contended that several creditor groups, particularly multi-employer pension funds and members of the unsecured creditors’ committee, wielded outsized influence during the case and stood to benefit from control of the post-confirmation liquidating trust.

In September, an appeals court affirmed the bankruptcy court’s ruling that Yellow remains on the hook for $6.5 billion in debt claims by 11 of its pension funds. MFN said in its plan objection that it was working with Yellow on a petition to the U.S. Supreme Court challenging that decision.

Both Yellow and MFN argue that the pension funds’ calculations failed to account for federal rescue funding the plans received through the American Rescue Plan Act.

The hedge fund also maintains that the trust’s governance structure was stacked with “conflicted members” and claimed the plan failed to meet the “best interests of creditors” test.

Goldblatt acknowledged that creditor factions had “made rather aggressive use” of their tools, but said the plan had been proposed in good faith and met the necessary standards.

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.

“Having presided over this bankruptcy case now for two-and-a-half years, I do understand MFN’s concerns,” Goldblatt said during the hearing. “I don’t think creditors would be better off with a conversion to Chapter 7.”

MFN’s notice of appeal was an expected move that could slow, though not necessarily derail, the final implementation of the plan. Appeals of Chapter 11 confirmations rarely succeed, but the filing underscores that the case isn’t fully closed.

More than 10 stakeholders—including MFN, the U.S. Environmental Protection Agency and the Justice Department’s bankruptcy watchdog—initially opposed the confirmation of Yellow’s Chapter 11 plan.

In the more than two years since its first filing, Yellow has focused on selling its substantial real estate and equipment holdings to have more liquidity.

Earlier in November, the court approved the sale of six former terminals, adding more than $10.2 million to the estate. Buyers included ArcBest, which acquired a facility in Montgomery, Ala., and several real estate firms that purchased sites in South Carolina, Florida, Michigan and Pennsylvania. A Rhode Island location was sold to civil contractor John Rocchio Corp.

Just 11 of the 325 terminals Yellow owned or leased when filing for bankruptcy remained unsold in September, according to a court filing.

These transactions build on the larger unwind that has generated more than $2 billion from Yellow’s terminal portfolio since the start of the bankruptcy. Meanwhile, sales of its rolling stock including tractors, trailers, yard trucks and forklifts have brought in $236.4 million in gross proceeds, with net returns of $175.7 million.

As Yellow’s estate appears closer to the finish line in divesting assets and garnering Chapter 11 approval, it secured a recent legal victory outside the bankruptcy court. Earlier this month, an appeals court reinstated Yellow’s $137 million breach-of-contract lawsuit against the International Brotherhood of Teamsters.

The lawsuit accuses the union of interfering in the second phase of the less-than-truckload (LTL) company’s “One Yellow” network restructuring, which the carrier said was critical to its survival. The Teamsters represented 22,000 of Yellow’s 30,000 employees when the company folded.