Shares of Yellow Corporation (YELLQ) plummeted 16.67% to $0.25 on Friday. The sell-off was triggered by formal objections from major shareholders to the company’s fourth amended Chapter 11 liquidation plan, escalating tensions in the complex bankruptcy proceedings.
Major Investors File Formal Complaint
Two of the trucking firm’s largest shareholders, hedge funds MFN Partners and Mobile Street Holdings, submitted a legal challenge against the current restructuring blueprint on Tuesday. Their complaint centers on the excessive control granted to the unsecured creditors’ committee over the liquidation process. The investors specifically note that several committee members are themselves involved in some of the largest legal disputes against the company.
The contested plan implements a “waterfall structure” for satisfying claims according to statutory priority but excludes Multi-Employer Pension Plans (MEPPs). Any remaining proceeds would be directed to a liquidation trust to be administered by the creditors’ committee.
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Despite acknowledging certain improvements over previous versions—including enhanced recovery rates for unsecured creditors and the potential for some shareholder distributions—the dissenting investors reject several core provisions. Their objections focus on three key areas: the release of claims against committee members, the appointment authority of the liquidation trustee, and committee control over four of the five trust board members.
Critical Court Dates Loom
This shareholder rebellion intensifies the uncertainty surrounding the bankruptcy’s outcome, which began in August 2023. The proceedings approach a crucial juncture on September 4, when the court will consider the adequacy of the disclosure statement and establish voting procedures. All objections and ballots must then be submitted by October 22.
These upcoming dates will prove decisive for the liquidation’s trajectory and whatever minimal recovery might remain for equity holders. The stock’s persistent downward trend reflects the ongoing uncertainties in what has become one of the most complex trucking industry bankruptcies in recent history.
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