Yellow Settles WARN Claims for $12.3M

Yellow Corp., the once prominent trucking company that filed for bankruptcy in August 2023, has reached a settlement with two classes of claimants alleging violations of the Worker Adjustment and Retraining Notification (WARN) Act. The settlement, announced at the start of a trial in the U.S. Bankruptcy Court for the District of Delaware, focuses on damages for laid-off workers and will now shift the trial's focus to union claims.

The WARN Act requires employers to provide at least 60 days' notice to employees before mass layoffs or plant closures. Yellow Corp. faced numerous claims totaling up to $244 million from hundreds of companies and municipalities alleging that the company failed to provide adequate notice to its former employees ahead of its mass layoffs and bankruptcy last summer. The specific terms of the settlement between Yellow and the two classes of WARN claimants have not been disclosed, as they are still being finalized and will remain confidential until the trial concludes and a motion to approve the agreement is filed.

The settlement between Yellow Corp. and the parties from the Moore and Coughlen lawsuits has several implications for the remaining WARN claims and the overall bankruptcy process for Yellow. Firstly, the settlement reduces the number of claims that will be litigated in the upcoming trial, potentially expediting the bankruptcy process by narrowing the scope of the trial and reducing the time and resources required to resolve the remaining claims. Secondly, the settlement may set a precedent for the valuation of WARN Act claims, which could influence the settlement of other WARN claims. If the terms of the settlement are favorable to Yellow, it may encourage other claimants to settle their claims at a lower value. Conversely, if the settlement is favorable to the claimants, it may embolden them to seek higher settlements or push for a more favorable outcome in the trial.

The settlement may also impact the overall recovery for unsecured creditors in the bankruptcy process. If the settlement results in a reduction of WARN Act claims, it could free up more assets for distribution to other unsecured creditors. However, if the settlement results in a higher payout to the claimants, it could reduce the overall recovery for unsecured creditors. Additionally, the settlement may impact the negotiations between Yellow and its creditors regarding a plan of reorganization. If the settlement is favorable to Yellow, it may strengthen its negotiating position with creditors. Conversely, if the settlement is unfavorable to Yellow, it may weaken its negotiating position and make it more difficult to reach a consensus on a plan of reorganization.

In conclusion, the settlement between Yellow Corp. and the parties from the Moore and Coughlen lawsuits has several implications for the remaining WARN claims and the overall bankruptcy process for Yellow. The settlement may expedite the bankruptcy process, set a precedent for the valuation of WARN Act claims, impact the overall recovery for unsecured creditors, and influence negotiations between Yellow and its creditors regarding a plan of reorganization. As the bankruptcy process continues, it will be important to monitor the progress of the remaining WARN claims and the overall recovery for unsecured creditors.