(Bloomberg) — Bankrupt trucker Yellow Corp. and its hedge fund house owners misplaced a key courtroom ruling over $6.5 billion in debt that pension funds declare the defunct firm owes them, probably wiping out most restoration for shareholders.
Most Learn from Bloomberg
US Chapter Decide Craig T. Goldblatt sided with pension funds over the way to calculate the penalty Yellow should pay for canceling staff’ retirement plans when the corporate shut down final yr. The ruling, issued final week, means there’s little likelihood the corporate could have any money left for shareholders like hedge fund MFN Companions after Yellow finishes promoting its actual property portfolio and paying the pension penalty.
Goldblatt didn’t set a cost quantity, however the ruling means the 11 pension funds concerned have the higher hand in how that debt is calculated. Yellow final yr offered its trucking terminals for $1.9 billion, sufficient to cowl all of Yellow’s secured debt however not pension claims.
Shares, which had been buying and selling above $5 most of this yr, plunged a document 88% on Sept. 13, when the ruling was launched. Shares have been buying and selling at 70 cents Tuesday.
The pension funds alleged Yellow is required to pay a “withdrawal legal responsibility” for canceling the retirement profit. The funds requested Goldblatt to rule that billions of {dollars} in federal grant cash they acquired from the US final yr must be ignored when that legal responsibility is calculated. Yellow requested the decide to do the alternative.
The Pension Profit Warranty Corp., which regulates retirements funds like these arrange for Yellow’s union staff, argued that different firms with conventional pension plans would have an incentive to cancel their retirement advantages if Yellow received since shareholders wouldnt be pressured to pay a hefty penalty.
Yellow claimed it was unfair to make it pay the penalty since federal grants made the pensions solvent for many years.
The case is In re Yellow Corp., 23-11069, US Chapter Court docket, District of Delaware (Wilmington)
–With help from Jonathan Randles.
Most Learn from Bloomberg Businessweek
©2024 Bloomberg L.P.
