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Disclaimer: The information in this article is for informational purposes only and is not legal advice. 51�ԹϹ��� is not a law firm. For legal advice tailored to your situation, please consult a qualified attorney.
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On March 28, 2025, Yellow Corporation filed its third amended disclosure statement, providing critical updates to its Chapter 11 liquidation plan. The storied logistics and shipping company was a leader in the less-than-truckload (LTL) sector, managing approximately 10% of LTL freight in the United States and employing nearly 30,000 people as of July 2023. Facing economic challenges and a liquidity crisis—partly due to unsuccessful negotiations for a new union contract—the company and its 23 subsidiaries filed for Chapter 11 bankruptcy on August 6, 2023, with $1.2 billion in funded debt. 

In the initial phase of the bankruptcy, Yellow successfully sold the majority of its assets, fully repaying its secured debt and shifting focus to a structured liquidation process. Disputes with pension plan creditors over the calculation and allowance of withdrawal liability claims came to a head in 2024, with multiple litigations unfolding, causing material delays in the bankruptcy process and reducing expected recoveries for the holders of General Unsecured Claims (GUCs). 

Global Settlement

As summarized in the latest disclosure statement, following negotiations, the Debtors, Creditors’ Committee, and holders of significant GUCs including the largest multi-employer pension plan claimants have now agreed on a global settlement framework that forms the basis for the Debtors’ latest liquidating plan. This structure reduces the total claim pool and enhances recoveries for non-joint-and-several (Non-J&S) GUCs by agreeing to stipulate the allowed amount of GUCs (primarily with pension-related claims) that have joint-and-several (J&S) claims against the various Debtor entities in exchange for their agreement to redistribute a portion of their recoveries to Non-J&S GUCs.

Liquidating Plan

The liquidation plan establishes a trust to manage Yellow’s remaining assets, including retained causes of action, with distributions overseen by a trustee appointed by the Creditors’ Committee. Most critically, the plan resolves disputes with multi-employer pension plan claimants, which clears the complex slate of ongoing litigation that has hampered efforts to confirm a consensual plan of reorganization. If the plan is confirmed, Yellow would dismiss its pending appeal of certain pension related litigation, reducing uncertainty and fee burn and paving the way to an orderly wind-down.

Projected Recoveries

Priority claims, estimated at $155–240 million, and employee claims for paid time off and commissions, ranging from $30–40 million, are projected to be paid in full. Convenience class claims, valued at $14–20 million, are also expected to achieve full recovery. Separately, WARN Act claimants have settled over $200 million of claims with the Debtors for a total of $14 million in allowed priority claims (the settlements have been approved by the Bankruptcy Court and a fairness hearing is scheduled for June 16, 2025).

Recovery projections for GUCs are contingent on the participation of J&S GUCs in the settlement. Electing J&S GUCs, totaling $3.29 billion, are projected to recover 12–16%, whereas non-electing J&S GUCs, totaling between $180–375 million, are projected to recover 12–17%. Non-J&S GUCs, totaling between $185–380 million would also recover 12–16% based on current participation levels. Increased participation by J&S claimants waiving their broader claim rights could elevate recoveries across all GUC categories to 16% or higher.

Next Steps and Options to Accelerate

Recovery The tentative voting deadline for creditors is set for May 9, 2025, at 4:00 p.m. ET, and the Debtors have requested a hearing on Confirmation for May 19, 2025, subject to court availability. Although the latest disclosure statement suggests that Yellow could finally be proceeding toward a resolution, risks remain. If the plan is rejected, unresolved litigation could resume, potentially delaying distributions and reducing recoveries. For a faster recovery and/or to avoid the risk of further disruptions, creditors may consider selling their claims for immediate cash.

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