American court hearing recordings and interviews - Season 7. Episode 9. February 14, 2024. In re Yellow Corporation et al., chapter 11 bankruptcy case no. 23-11069, audio of hearing held in the Yellow Corp. bankruptcy proceedings pending in Delaware, USA, #trucking

Episode Date: February 18, 2024

For filings in the Yellow Corp chapter 11 bankruptcy proceedings see https://dm.epiq11.com/case/yellowcorporation/dockets

Thank you, seated. So good morning. We are here in Inray Yellow Corporation, case number 23-1106-9. Good morning, Your Honor. Allison Smith, Kirkland and Ellis for the debtors. I thought I just started by providing a brief update to the court, and then I'll see the podium to my partner, Mike Slade, to take us through the agenda.

Terrific. Actually, before you do that, can I just one quick point? One quick point. Of course. So our chambers reached out yesterday to counsel for debt or with respect to some very, some small issues that arose in connection with our review of the fee applications. I just wanted to say essentially this took us longer than it normally does or that it should have.

That's my fault. basically just through well my judicial assistant who normally reviews us is now a maternity leave we had such as some internal rearranging to do and it took longer than it should have and I just wanted to say that I take that's that's no one's fault other than mine and I take responsibility so that I do care that we get those turned around promptly I appreciate the importance of that and just wanted to acknowledge that that took longer than it should have and that's entirely my fault and we're working on it so thank you all for your

patient so with that miss let me pass with the time back to you and of course no issue at all we know that we drop a lot of paper on you with with those applications we are in receipt of the comments and we're working to get back to you hopefully later today on those terrific okay thank you um so with respect to yellow uh we are continuing to close a number of sales for both owned and lease property as of today we have closed 17 sale transactions comprised of 118 owned properties and 25 leasehold interests uh totaling approximately 1.9 billion million dollars. An additional six transactions are slated to close in the coming weeks

comprised of 10 owned and one leasehold interest and those sales total approximately 71.6 million and with the proceeds we have received to date we've paid off all of the debtors secured debt including both dip facilities and have approximately 300 million cash on hand. Obviously there's still work to do on the sale front and we will be back before your honor on the 26th seeking to assume certain leases to continue those sale and marketing efforts, but otherwise the next stage of these cases, which will really come to the forefront, will be addressing and reconciling the claims pool. The first omnibus claims objection is on the agenda for today, though we were

able to consensually resolve all comments and issues and have filed a certification of counsel. And so making progress on the claims front will of course inform us what the claims pool actually is and that will consequently inform what a plan and distributions may look like as well. So just one day, kind of preview. That's communist. I'm sure you're already aware. But otherwise, we are still making great progress in progressing on the sales. So big picture, so I understand it. So you've got $300 million in cash after paying off all of the secure debt. Correct. And then there are additional assets that you're in the process of, we're talking about it, I understand that until it's resolved, it's not resolved, but we're talking about a material sort of further, you know,

amounts to come into the estate or? I think so. That's obviously the goal. We still have a number of owned properties, I think 30 to 40, and then we still have approximately 75 leases that we are seeking to assume to continue marketing given indications of value and interest from the market. So definitely not an insignificant amount. Okay.

And then you've got an unsecured claims pool of whatever it is and I understand we have an issue there and that's what the work that's being done. That's right. Okay, that's helpful. Thank you very much. Then nothing further from me, Your Honor. Okay, very well. Good morning, Your Honor.

Mike Slade for the debtors. There are a few matters to discuss with the court today. The first one is what's number 42 on the agenda. It's our motion to compel closing of one of the sales with respect to All-Star. I think the good news is we did get a reach out last night from the, counter party saying that they do intend to close which I think assuming they follow through on that that's good news but we do not want to have to go back come back to the court if it doesn't happen so we are still intend to proceed this morning

and asking the court to enter the order you entered the order a short notice yes I guess my question is an all-star presumably was served with with copies of the motion and the order that they were and we did file the certificates of service on the docket those are on the docket at number 2176 and 2178 okay and I looked at the docket this morning and I don't see a response let me I guess before when you proceed I guess I'm interested if all star is here and would like to be heard with respect to this matter doesn't appear so okay so I take it you want me to enter the order that is now unopposed and there's no question that they had it and

knew that they could respond if they wanted to that's correct well yeah First, I would ask Your Honor to enter into evidence the declaration that we filed in support of the motion, which is the declaration of John Kremens of Ducera, which is at docket number 2147. I would ask Your Honor to enter that into evidence. Okay. Is there any party in interest that objects to the admission to evidence of the Kremens Declaration? Seeing none, it will be admitted. Okay.

And I'm happy to go through it in as much detail as Your Honor wants, but I think the breach is fairly clear, and we would ask you to enter the order, which, you know, which is admitted. is at docket number 2138-1. Okay, so I reviewed the papers. I was satisfied in shortening notice that it was appropriate for this to be heard on a reasonably expedited matter in an expedited manner. I did see the debtors moving papers and the declaration and support. I'm reading it.

It occurred to me there might be another side to the story, and if someone came in to tell me the other side, I would hear them out, but in the absence of the party, appearing to be heard and in light of my being persuaded that moving this matter forward promptly was appropriate and that the notice while short was sufficient and warranted on prepared into the order. Thank you, Your Honor. We appreciate that. And so I think the order will be – is it – will be uploaded?

Okay. Terrific. Thank you very much. Thank you, Your Honor. The next item on the agenda is number 44 on the agenda. It's the debtor's objection to the proofs of claim that were filed by the Central States Pension Fund. There are also an objection that we filed that I think, Your Honor, likely saw to 10 other multi-employer pension funds claims that raise overlapping issues. These are going to be critical issues in the Chapter 11 cases, Your Honor, and really are going to be the issues that drive creditor recoveries, which is why,

it was the first claims objection that we filed because it's so important. Since we filed these two objections, we have spoken extensively with the lawyers for both central states and the other 10 MEPs, and we reached agreement on a proposed scheduling order, which we filed at docket number 2141, which is a proposed scheduling order that would contemplate a trial starting August 2nd, if your honor has time on your calendar. And I think that's what we want to talk a little bit about today. But that's an agreed scheduling order between the debtors and the claimants. The PBGC filed an objection.

I spoke to them yesterday, and we resolved the PBGC's issues. So Ms. Thomas will confirm this, but they are withdrawing their objection to the proposed scheduling order. And we would ask that Your Honor enter it so that we can move forward with the discovery matters that are pending in the dispute okay let me see if any any party in interest has a different view with respect to setting the scheduling order with respect I guess it's now 11 claims objections 11 different funds there are many many claims understood good morning your honor Bill Sullivan of Sullivan his a time Allison as counsel for central states pension fund as well as co-counsel for the

10 additional funds that were subject to the second omnibus objection. Your Honor, appearing by Zoom today given that this was a like status and scheduling conference is Brad Berliner. He is with Central States and also Ed Meehan with the Groom Law Group. The Groom Law Group was retained as special council for all 10 of the funds that are subject to the second omnibus objection. My firm has been retained as co-counsel for those. So we have sort of coordinated in part because central states filed a motion to compel arbitration of withdrawal liability issues and then yesterday the other 10 funds filed a similar motion

and so scheduling has been coordinated with respect to those as well. which is currently scheduled for March. Mr. Sullivan, am I understanding the state of play correctly that you don't object to my entering a scheduling order today on the claims allowance dispute? But that – so we're going to start, and then when we get to it, we'll hear the motion to compel arbitration. Yes, Your Honor. Obviously, we did consent to the deadlines in the scheduling order subject to Your Honor's approval of the dates in particular.

There's a dispositive motion date and there's trial dates, but I'll be happy to defer to Mr. Berliner to see if he has any further comment than that. Okay. Mr. Berliner, are I understanding the state of play correctly? Good morning, Your Honor. Yes, you understand the state of play correctly. We are consenting to the entry of the date set forth in the scheduling order and obviously You know subject to your honor's agreement and and and any effect that a ruling on March 6 regarding the motions to compel arbitration that may that may that they may have Okay. Okay. So mr. Sullivan anything further not at this point you're wrong Okay. Good morning, Your Honor.

I'm Stephanie Thomas on behalf of the PBGC. I just wanted to clarify a point or two. We did agree with debtors yesterday that they would apply Rule 45 to the discovery that they issued to us because it was in the form of the subpoena so that the processes in the order do not apply to PBGC. All right, so actually let's back up. Okay. I want to make – this is one of the things I want to wrap my brain around here.

is the notion that, you know, at some level, this is a dispute between the debtors and the funds, but on the other hand, the result affects lots of parties in interest in the case, including the PBGC, and I want to make sure that we're establishing a process that appropriately provides for the opportunity for anyone who's affected to appear to be heard. So I guess I saw, so you're not actually, it's not your claim. You're essentially the insurer of the liability. Is that my getting the structure of this right? Yeah, Your Honor, we're a federal government agency that insures the single-in pension,

the single employer pension plans, a multi-employer pension plan. Right, and this is a multi-employer fund, and so it's subject to that part of the PVGC that basically is the backstop for the ability to satisfy those obligations. Correct, Your Honor, and we, I'm sorry, I didn't mean. Thank you. Thank you, Your Honor, we promulgated the regulation that the debtors challenge in their claims objection. And if it's helpful, I will address that aspect of it too, because we did discuss that

with the debtors as well. Okay, and I, before getting on the bench this morning, looked at the brief. So I understand you've got regulatory authority and that part of the district. involves a challenge to the regulation essentially. Yes. And does that make you a – and that seems like it – from first principles ought to give you a stake in the resolution of the dispute and the opportunity to be heard in it. Does the scheduling order provide that mechanism?

Well, Your Honor, when we discussed with the debtors, they suggested that we should file a motion that basically contains the arguments that we – addressed in our response. And so while we think our response is adequate to address those issues, we agree to just reformulate it as a motion for the court to hear, because we do think it's an important dating issue. We actually think we are a necessary,

and really the only party in terms of challenging the regulation. And we agreed with the debtors to tee that up as a motion rather than as a response. Look, my basic view is that the principal difference between an adversary and a motion like the caption on the piece of paper. You know, the form of notice, but as long as you actually get actual notice, then the form of notice doesn't make a lot of difference.

And then the presumptive time limits, but in any event, the presumptive time limits on a motion and in an adversary are all subject to the court's authority to set appropriate scheduling. So to me, the form of paper isn't what I'm mostly concerned about. What I'm mostly concerned about is we create a mechanism in which parties who have a stake have the opportunity to appear and be heard. It sounds like you're satisfied we've accomplished that. Do I hear that correctly?

Well, I guess, Your Honor, I believe that it will certainly, you know, I would hope that the court would agree with us that we're a necessary party, and then there's a form to be taken. We have various arguments about venue, and that it may affect the schedule, once our issues are heard. So I think we're a little bit agnostic on the schedule at the moment, but in terms of the debtors going forward at this point with discovery, we don't have an issue with that.

Okay, and whether you're really happy or going along begrudgingly isn't my principal focus. What I want to understand is I don't have an objection to proceeding this way, and you're not saying, no, Judge, you can't, reserving your rights to say whatever you want down the road, you're not saying today you shouldn't enter you. this order. That's right, Your Honor. We're just – we're reserving our rights and view it as if something needs to change

the schedule later on, assuming that Your Honor is – you know, is willing to do it that way. I feel like that's your decision and not – Oh, fine. Okay. Well, I view my job mostly about making sure we've got a level playing field and a fair process and to resolve objections that are brought to me. And it sounds like I don't have an objection brought to me today if things unfold in a way

that cause any – any party interest to come in and say, judge. you need to change the way you're doing this. I'll listen to you and we'll make a decision when that issue ripens. Well, we expect our issue to be heard in the omnibus on March 6th, Your Honor, obviously subject to agreement. Okay. You've finally broken loose from work. Three friends, one tea time, and then the text.

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If I'm in, it's Edward Mann, and I'm at the groom firm representing the other 10 funds. What I want to say, Your Honor, first of all, thanks for allowing me to appear very briefly here on Zoom but two very quick points they all tied in the same same idea we worked very cooperatively not only with Central States among the 11 but with the debtor and I wanted to commend the debtor or the way we worked effectively as counsel to cooperate to to hammer out over I assure the court a long series of discussions what we all thought would be an appropriate schedule reserving everybody's rights and we we also had made

in that regard with PBGC and I want to assure the court and PBGC that we will continue in those efforts to make sure everybody can work together for the most efficient resolution obviously we think it belongs an arbitration but that's an issue for March 6th but I just wanted to let the court know that we are working very cooperatively together and and I think that's why you're on receiving this this schedule that was hammered out okay thank you mr. Mayne I appreciate that and do appreciate everyone's court look I understand there are important issues on which parties

disagree and that's fine I'm happy to do my job but to the extent you can all do what you're doing which is try to tee it up in a manner that is as you know sort of straightforward and simplified and reasoned as possible that makes my job easier and I do appreciate that so thank you to us thank you to everyone thank you mr. Slate can I ask you this question sure just one point certainly just one point of disagreement with Ms. Thomas is that PBGC does not have an economic stake in the outcome of this dispute the economic stake is between the estate and the funds.

But it is the regulator and they have taken a position. Okay. And, you know, I hear that. And I take, generally speaking, so, and this will bear on the question I have for you. My general view is that one thing that's different about bankruptcy than two-party litigation out of bankruptcy is it appreciates that the proceedings are collective one. There are a lot of parties who may be affected and the statutory definition of party and interest I think is broad and if there's a regulator that would

like to be heard. Frankly, whether we treat them as a party or as an amicus or whatever is really of no moment, I want to make sure I'm getting the input that I need and that someone who has a concrete stake has the opportunity to be heard on matters that affect them. To that end, I know that the claim objections here were filed by the debtor, but that that there may well be other parties in interest, right? Claims allowance, it's not only the debtor that can object to the claim and that there are lots of parties in the case who may be affected by the decision whether the claims are allowed

or disallowed. And does the scheduling order you've asked me to enter create a mechanism for those parties and interest with an economic stake to appear and be heard? And I raised that question in part because it may or may not affect one's thinking about who are the parties to this and are these all the parties? parties who are statutorily obligated to proceed to arbitration. I think, well, I think that's one difference in arbitration. We don't think it's appropriate for this to pursue, but I don't think any of the other

parties would be permitted there. Here, there's plenty of. What I'm saying now is without prejudice. I just want to make sure that when that question is brought to me, it's brought to me on an appropriate record where I've got the matter teed up in a way that allows me to think about that fully, and everyone who wants to participate, participates. look, if the only people who want to participate are their debtors in the fund, that's one thing, and it might or might not be a different thing if there are other parties who desire to participate in the matter.

I think there's plenty of time in the schedule for others to participate, and the only relevant deadline to, like, for example, the creditors committee, or to any other creditor who is not served with the subpoena would be the dispositive motion deadline. There's a dispositive motion deadline in the proposed schedule, but that's fairly far out, and I think it would allow any parties. Now that's just a deadline. If someone wants to file a motion earlier, as I talked about with Mr. Meehan, they have every right to file a motion. And so if someone were to choose to join in your objection, there's nothing precluding them from doing that?

No. Okay. Okay. That's helpful. Thank you. Yes. So I think that's all for... Your Honor, if I may?

So Ms. Thomas stood up first. Let me give her the opportunity to be heard, and then I'm happy to hear from me. Thank you, Your Honor. I just wanted to address something that counsel said a minute ago. In saying that PBDC does not have an economic stake in this, I have to disagree with that. We are the federal government. We've been using taxpayer monies to pay SFA funds to applicant multi-employer plans. Those applications have been based on certain projections and assumptions that our regulations affect. There's a possibility that or maybe even a likelihood that plans would become insolving,

sooner if these regulations are invalidated and that would affect PBGC solvency and ensuring the multi-employer pension plan. My colleague John Ginsburg's on the line if you want to hear more about this or if I said something wrong and he has expertise in that area in particular but I just wanted to address that I felt that that was a mistake. Okay fair enough and as I said I do you know come at this with the view that this is a collective proceeding that's what distinguishes bankruptcy from other kinds of for up for resolving disputes and would certainly intend to be sure that anyone

who you know asserts an economic stake has the chance to come in and tell me what how it affects them and why their interest should be heard so mr. Ginsburg thank you your honor John Ginsburg for the Pension Benefit Guarantee Corporation I represented PPCC respect to multi-employer issues So yeah, just to further to Ms. Thomas's point, the PBDC has provided some $35 billion in so-called special financial assistance to the Central States Pension Fund and an aggregate a billion dollars to the other 10th plans to whose withdrawal liability claims debtors have objected. Those plans received the amount that they received based on projections of the contributions that they would receive in the decades to come from the employers that contribute to those plans. If this rule is ignored or invalidated, it completely changes the economics of withdrawal

for those employers. employers will withdraw, it will invalidate the projection on which the was determined, undermine the entire program, cause the program to fail to achieve the purpose that Congress intended, which was to provide a one-time infusion of funds to these plans to enable them to pay pension benefits or decades to come. It will cause earlier insolvencies of these plans. and will then turn to PBGC's pension insurance fund. And thereupon the benefits,

the retirement benefits of the participants and their beneficiaries for many of them will be cut back. The maximum guarantee after 30 years for the multi-employer pension guarantee is less than $13,000. Okay, so Mr. Ginsburg, let me say the following.

For now, you should proceed on the assumption that to the extent someone seeks to invalidate a regulation that was promulgated by the PBGC, and the PBG wants to come in and be heard to defend the validity of the regulation, that unless and until someone persuades me, I should stop listening, you'll have ample opportunity to be heard and the court will consider whatever

arguments you might make. Thank you very much, Your Honor. I just wanted to be sure that the court was not this led by Mr. Slate's assertion. It was in PBGC had no evidence to make interest here. Okay. So, look, I understand both sides' perspective on this, and I don't think I need to resolve the fine points of that

in connection with entering the scheduling order. I'd want to make sure all the parties understand the way I'm thinking about this so that we've got a level playing field and everyone is being treated fairly. I think we've accomplished that. So, yes, Your Honor, we are very, I mean, we disagree with PBGC, and we are really able looking forward to presenting all the factual evidence to your honor that you can use to decide

whether Mr. Ginsburg is right or wrong. Okay, so that's not in front of me today, so I'm not to say anything about it, and look forward to giving the parties the opportunity to present their cases and we'll sort it out when I have it in front of me. Thank you, Your Honor. We would ask you to enter the scheduling order, and I'm not sure what Your Honor's calendar looks like, so we put a blank in the- That's a fair question, and you want a trial date, so...

August 2nd was the proposed trial date. I think none of us really know right now how long the trial. could take and it's going to depend on how the evidence shakes out I think in the discovery process so so August 2nd is a Friday is that right which is fine I'm happy to work on Friday's your honor if I may I thought I think it was going to begin August 5th if I recall I say ah you're right sorry okay that's fine and the week of August 5th that's Ms. Barkdale tells me otherwise and she's suggesting that maybe I'm getting something right.

We can all be surprised. It looks like that week is actually as of now wide open. So I'm happy to hold, well, why don't we, why don't I for now hold the week? And as things unfold and we get closer, if we should free up any of those days, we will. That's right. And I think the funds that suggest that it actually could take more than a week. I don't know about that. All right.

Well, why don't I hold a week for now? and it's without precedent if it's longer or shorter we'll deal with it very good your honor thank you is any any objection to proceeding on that basis okay seeing none that's what we'll do great thank you we'll upload a proposed order with uh with those dates terrific thank you mr slate thank you your honor the next item on the agenda today is the omnibus claim adr procedures which is number 45 on the agenda We filed the most recent version of the proposed procedures, which are agreed amongst the debtors, the committee, and OREC. That is at docket 2184. We believe that those proposed procedures should resolve most, if not all, of the objections that were filed.

We recognize, and some of the folks have reached out to us, that they need to talk about them with clients and so what I would propose to the court is that we will continue the procedures motion to the hearing that is scheduled for February 26th which will allow some of the claimants to talk to their clients and make sure that they're okay with the procedures and if we if we can confirm before that that everyone is good with them will submit it on certification of counsel but if not we'll have an argument but I think we have resolved the overwhelming majority if not all of the points that folks have made.

Okay, so the punchline for now is that it's being adjourned to the 26th, that if there's then extant objection, we'll hear it and resolve it on the 26th, and if you are able to bring peace into the world, you can submit a certification and we'll go ahead and enter the order. Very good, yes, thank you. Okay, thank you. On the next item is the first omnibus objection to claims, which is item 47 on this.

docket as miss smith mentioned earlier we were able to resolve all of the folks responses and we submitted a certification of counsel and we would ask your honor to enter the proposed order which is exhibit one to docket number two one seven nine okay so I saw that before getting on the bench and I signed off on that order so if it hasn't it may have hit the docket already because of the magic of miss Barksdale and if it hasn't it will shortly very good thank you The last item I have for today, Your Honor, is our document preservation or lack thereof motion,

which is docket number 2000, item 49 on the agenda. The reason we found the motion, Your Honor, is pretty straightforward. This is a company that's winding down its operations. We continue selling properties. There's a massive amount of paper that's both in off-site storage and is located on the sites that are being sold. and we wanted to give people notice that we needed to do something with these materials, that we did not want to spend the estates and creditors' money continuing to store them. And if we needed to scan or preserve something, we wanted people to tell us what needed to be preserved.

There were a couple of response that were filed, and we worked cooperatively and continued to work cooperatively with those folks. The U.S. trustee asked us to make an adjustment to the proposed order, which we agreed to do. and I think the two parties that are remaining, one is one of the local pension funds, local 641, that is doing a payroll audit. They wanted to make sure that they had the relevant materials. We provided the overwhelming majority to them. My understanding is the only item remaining is time cards from 2019.

We don't believe those are in the materials that are being destroyed, but what we're trying to do is give them copies of everything they need. so that we can be comfortable and similarly we talk with the PBGC about this they provided us a list of the items and the items that they need relate not to the multi-employer pension funds but to the single employer pension funds and they gave us a list we are going to continue to coordinate with PBGC to make sure that they have what they need with respect to the single employer funds and we've committed to do that but in all other respects I believe this is not opposed

would ask that your honor at your order okay so you're saying the order in its current form that the object I understand you're working with two parties to get them new materials they want but do either let me let me ask if either of those parties objects to the entry of the order in its current form we do not object to the entry of the order in its current form okay if there any any party interest I would like to be heard in opposition to the debtor's motion with seeking the authority to or abandoned books and records we do have to upload a revised order to incorporate what we promise with the u.s trustee but other than that's very minor and other than that we

would ask you on the order okay so seeing no objection I've reviewed the motion in order I'm satisfied in the absence of an objection the relief sought is appropriate and if you upload a revised form of order we will take a look and then unless anything jumps out at the court we will enter the order okay that's all I have for today thank you your honor we appreciate it thank you So while we're here, is there any other party interest that would like to be heard on any matter? Okay. Seeing none, my thanks to the parties for all of the cooperation that brought us here, we will enter those orders upon their being uploaded.

And with that, we're adjourned.