A federal appeals court has dealt a decisive blow to Yellow Corp. and its largest shareholder, MFN Partners, upholding pension funds’ multi‑billion‑dollar withdrawal claims and largely closing the door on equity recovery from the LTL carrier’s bankruptcy estate. In a September 16, 2025 ruling, a three‑judge panel of the U.S. Court of Appeals for the Third Circuit affirmed a Delaware bankruptcy court order that left intact roughly $6.5 billion in asserted claims from 11 multiemployer plans tied to Yellow’s 2023 shutdown.
The panel backed two Pension Benefit Guaranty Corporation rules that govern how COVID‑era rescue money is treated when employers exit union pensions. Those “phase‑in” and “no‑receivables” provisions prevent plans from immediately counting American Rescue Plan special financial assistance as assets for withdrawal‑liability math, limiting companies’ ability to use the bailout to shrink their exit bill. The court also enforced contract language that requires Yellow to calculate liabilities at pre‑concession contribution rates for certain Teamsters plans—despite years of discounted payments—further boosting the tab.
Why it matters for trucking: the ruling cements a strict playbook for employers participating in multiemployer plans. For carriers weighing restructurings or network exits, the Third Circuit’s decision reinforces that federal rescue funds were designed to protect participants—not subsidize employer withdrawals—and that plan‑friendly rules will control liability calculations during and after a market disruption. That clarity may discourage aggressive withdrawal strategies elsewhere in LTL and unionized segments of TL and warehousing.
For Yellow’s creditor stack, the opinion narrows the path to any additional recoveries for unsecured trade claimants and effectively wipes out hopes that residual cash might flow to shareholders. Reuters reported the panel’s view that PBGC’s regulations aligned with Congress’s intent and that the 2013 agreement obligating Yellow to use the higher, pre‑concession contribution rate remains binding—developments that push pensions toward the front of the unsecured line.
The ruling caps months of fast‑tracked appellate litigation and follows a year of estate monetization efforts that put the focus squarely on how the proceeds would be split. With the Third Circuit now affirming the key legal framework, the bankruptcy case pivots from “if” to “how much” on allowed withdrawal liabilities, and to the timing of distributions under a plan that must reflect the appellate guidance. While Yellow and MFN could seek further review, the panel’s precedential opinion gives pension funds strong leverage in any final claim negotiations.
Bottom line for carriers and shippers: this decision hardens the legal environment around multiemployer plans. In practice, it raises the cost of abrupt exits and shifts greater emphasis to earlier, collaborative restructuring moves—long before pension funding status becomes a crisis variable in network and labor planning.
Sources: FreightWaves, Reuters, Justia
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