The opinion
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
CRAIG T. GOLDBLATT (ge 824 N. MARKET STREET
JUDGE f a WILMINGTON, DELAWARE
fae Sa (302) 252-3832
by alll, A
September 12, 2025
VIA CM/ECF
Re: Inre Yellow Corporation, et al., No. 23-11069
Dear Counsel:
This Court held a hearing on September 5, 2025 on the fourth amended
disclosure statement in connection with the debtors’ fourth amended plan.! Various
objecting parties, led by MFN, objected to the approval of the disclosure statement.
MEN’s basic position is that the proposed plan is beset by problems of corporate
governance. It contends that the most significant factor that will drive the recoveries
of the holders of unsecured claims will be the allowance of various claims asserted by
multiemployer pension plans, to which it (and the debtors) have objected. Under the
plan, a majority of the board of managers of the liquidating trust will be appointed
by the Committee. And a majority of the Committee's members are multiemployer
pension plans. MFN views this situation as one of the fox being left to guard the
7547.
2 MEN Partners, LP, along with its affiliate, Mobile Street Holdings, LLC, is referred to as
“MEN.”
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henhouse. MFN further argues that this problem is exacerbated by the fact that the
trust will control a cause of action that the debtors asserted, prepetition, against the
Teamsters Union. So MFN contends that the close relationships between the
multiemployer pension funds and the unions thereby creates further conflicts.
The debtors’ basic response to this argument is that there is nothing at all
surprising about the beneficiaries of a trust having a say in the governance of the
trust, and that (for this reason) it is commonplace in chapter 11 cases for creditors’
committees to appoint the managers of post-confirmation liquidating trusts. To the
extent that issues may arise between the trust and one or more of the entities that
has appointed a member of the board of managers, ordinary corporate law principles
involving disclosure of conflicts and recusal of conflicted members should be sufficient
to ensure that the trust operates as an honest fiduciary that acts in the best interests
of the beneficiaries of the trust.
At the September 5 hearing, the Court concluded that it would approve a
disclosure statement, but that the disclosure statement should include an insert in
which MFN states the reasons why it contends that the plan is deficient, and the
debtors may offer their response to MNF’s statement. Needless to say, the merits of
the objection to confirmation are not before the Court at this time, and all parties’
rights on that merits issue are reserved. The parties have met and conferred about
the language to be included in such an insert to the disclosure statement but could
not agree. They have provided dueling language to the Court for its consideration.
This letter ruling is intended to resolve that dispute.
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The governing legal standards are not particularly contested. A
disclosure statement must include “adequate information.”3 That term is defined by
the Bankruptcy Code to mean “information of a kind, and in sufficient detail, as far
as is reasonably practicable … that would enable … a hypothetical investor of the
relevant class to make an informed judgment about the plan.”4 The statute goes on
to explain that “in determining whether a disclosure statement provides adequate
information, the court shall consider the complexity of the case, the benefit of
additional information to creditors and other parties in interest, and the cost of
providing additional information.”5
The task is thus to ensure that the disclosure statement contains
“adequate information” to enable impaired classes of creditors and interest holders to
make an informed judgment about the proposed plan and determine whether
to vote in favor of or against that plan.6 In this regard, the Court’s overarching view
is that (a) less can be more – there are times that including more information makes
a document less understandable; (b) plain English is better than legalese; and
3 11 U.S.C. § 1125(b).
4 Id. § 1125(a)(1).
5 Id.
6 See, e.g., Century Glove, Inc. v. First American Bank of New York, 860 F.2d 94, 100 (3d
Cir.1988); In re Phoenix Petroleum Co., 278 B.R. 385, 392-393 (Bankr. E.D. Pa. 2001). See
also H.R. Rep. No. 595, 95th Cong, 1st Sess., 408-409 (1977) (“Precisely what
constitutes adequate information in any particular instance will develop on a case-by-case
basis. Courts will take a practical approach as to what is necessary under the circumstances
of each case, such as the cost of preparation of the statements, the need for relative speed in
solicitation and confirmation, and, of course, the need for investor protection.”)
Page 4 of 8
(c) where a disclosure statement sets forth competing views about the best course for
the estate, the positions should be set out in a balanced and measured way. The goal
is to inform creditors, not to inflame them.
The Court has reviewed the dueling language submitted by the parties. The
Court concludes that to best achieve the goals reflected in § 1125 of the Bankruptcy
Code, the disclosure statement insert should read, in substance, as follows:
Article III.U: Are there any parties anticipated to object to
confirmation of the Plan?
MFN Partners, LP (“MFN”), Mobile Street Holdings, LLC (“Mobile
Street”), CRG Financial, LLC, Interstate Building Maintenance Corp.,
and Boulevard Truck Lease, Inc. (collectively, the “Objecting Parties”),
who collectively hold more than 110 claims against the Debtors (and in
the case of MFN, is the largest shareholder of Yellow) believe that the
proposed Plan is flawed and will not maximize recoveries for Class 5
creditors and Yellow’s shareholders. The Objecting Parties have
requested that this Disclosure Statement include the following
information. The Plan Proponents – the Debtors and the Committee –
disagree with the Objecting Parties’ positions. The Plan Proponents also
believe that MFN is motivated by its equity interests. The Objecting
Parties do not believe that the Committee members are motivated by
maximizing recoveries for Class 5 general unsecured creditors.
Under the Plan, the Committee is positioned to select a majority
of the Liquidating Trust Board and, in consultation with the
Debtors, the Liquidating Trustee, which the Objecting Parties
oppose because members of the Committee hold the largest of the
Disputed Claims in the Chapter 11 Cases.
Under the Plan, the Committee has the exclusive right to appoint four
of the five members of the Liquidating Trust Board of Managers (the
“Trust Board”) and nominate (with the Debtors being the only other
consultation parties) the Liquidating Trustee. Pursuant to the
Liquidating Trust Agreement, the Liquidating Trustee will act at the
direction of the Trust Board, including whether to pursue, settle or
abandon claim objections and litigation claims that could (if the
Liquidating Trust is successful) significantly improve recoveries for
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Class 5 creditors and potentially provide a return to Yellow’s
shareholders. The Plan Proponents assert that the decisions by the
Liquidating Trustee, at the direction of the Trust Board, to pursue,
settle or abandon claim objections and litigation claims are subject to
approval of the Bankruptcy Court to the extent certain materiality
thresholds are exceeded.
The Objecting Parties believe that this is problematic for Class 5
creditors and shareholders for the following reasons:
• The 7-member Committee is comprised of two trade creditors; one
former employee; the Central States, Southwest and Southeast Areas
Pension Fund (“Central States”); the New York State Teamsters
Pension and Health Funds (“New York Teamsters”); the International
Brotherhood of Teamsters (“IBT”); and the Pension Benefit Guaranty
Corporation (“PBGC”). Throughout the case, the Debtors’ estates (and
in some cases MFN/Mobile Street) have objected to claims of, taken
positions adverse to, and/or sued Central States, New York Teamsters,
IBT and PBGC.
• While the Debtors have worked closely with MFN/Mobile Street to
disallow billions of dollars of claims asserted by Committee members
Central States and New York Teamsters (and are seeking to disallow
hundreds of millions of dollars more), the Committee has not joined in
these objections. While the objections have thus far been generally
successful, the Court’s decisions sustaining those objections have not yet
been tested on appeal.
• The Committee has called the Debtors’ pending lawsuit and appeal
against Committee member IBT a “Hail Mary”, indicating that a
Committee-controlled Trust Board may likewise will take a dim view of
the litigation against the IBT (the “IBT Suit”). The Debtors have
previously publicly stated that the potential value the Debtors may
stand to recover from the IBT Suit is over $1.5 billion. Accordingly, the
Objecting Parties believe that success against the IBT could result in
payment to all creditors in full. As noted herein, however, the Debtors
have not succeeded in the IBT Suit to date and the U.S. District Court
for the District of Kansas (the “Kansas District Court”) has dismissed
the Debtors’ complaint and also denied the Debtors’ motion for
reconsideration. The Debtors have appealed to the Tenth Circuit Court
of Appeals (the “Tenth Circuit”) and would need the Tenth Circuit to
reverse the Kansas District Court’s prior rulings to have any chance of
success in such action. MFN/Mobile Street detailed their views of the
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effects of these objections in their motion to convert [Dkt No. 6204] at
paragraph 17 and encourage all Class 5 creditors to review it; and
• While the Debtors’ estates have brought over 600 “preference” adversary
proceedings against entities who received payments from the Debtors
within 90 days of the Petition Date (including some for as low as
$12,000) despite many of them having ordinary course or new value
defenses which would otherwise extinguish such claim(s), not a single
Committee member was sued to avoid a preference even though several
Committee members received payments within the same 90-day period.
Because the two-year statute of limitations has now passed, any
preference claims against Committee members have effectively been
released. However, the Plan Proponents note that ASK LLP (the
Debtors’ special counsel retained for purposes of pursuing preference
claims) determined that transfers made to Committee members were
either not viable preferential transfers or were subject to viable
defenses. The Objecting Parties note that ASK has not made such
determinations with respect to other creditors notwithstanding noting
potential affirmative defenses in many of the complaints.
These highlighted matters are why the Objecting Parties are concerned
that issues regarding the post-confirmation governance of the trust –
which have been a major source of friction and cost in these cases for
over a year – cannot be handed to a constituency that itself has
conflicted members.
The Liquidating Trust Agreement’s “Conflict Provisions” Are Not
Sufficient.
The Debtors and the Committee believe that the proposed Liquidating
Trust Agreement contains conflict provisions that protect Liquidating
Trust Beneficiaries from unfair transactions. The Objecting Parties
encourage all Class 5 members to carefully review the Liquidating Trust
Agreement, which is attached hereto as Exhibit __.
The Objecting Parties believe, among other things, that the “conflict
provisions” found in section 7.4 are insufficient for this case which, in
the Objecting Parties’ view, is materially different than typical issues of
conflicts for Delaware trusts. The Plan Proponents disagree and believe
that the conflict provisions are appropriately tailored to ensure that any
members of the Trust Board that have conflicts on any issue to be
considered by the Trust Board will be recused from such discussions and
decisions and will not have access to any related information.
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The Objecting Parties have proposed several ways to resolve their
concerns, but no agreement has yet been reached on any or all of these
proposals. These include:
• Appointing to the Liquidating Trust Board of Managers one
independent Manager (i.e., not selected by the Committee or the Debtors
though it can be a Class 5 creditor) who is authorized to direct the
Liquidating Trustee with respect to prosecuting or settling any pending
or anticipated estate claim objection involving any multi-employer
pension plan, any WARN Act claim, or litigation against the IBT or any
Committee member (to the extent not released or exculpated under the
Plan);
o The Plan Proponents do not believe this is a valid concern because
the Liquidating Trustee will be an independent entity and will
also serve as one of the five Managers serving on the Trust Board.
The Liquidating Trustee will not be a member of the Committee
and will be an independent entity with appropriate experience
serving in similar trustee and fiduciary roles.
• Deeming, as of the Effective Date, Central States, New York Teamsters,
the PBGC, and the IBT “Conflicted Managers” with respect to any multi-
employer pension plan claim, any WARN Act claim, or litigation against
the IBT, such that they cannot have access to any privileged materials,
cannot participate in any Board meeting where such matters are
discussed, and none of their advisors can be engaged by the Liquidating
Trustee for such matters;
o The Plan Proponents do not believe that this is a valid concern
because, as noted above, the conflict provisions in the Liquidating
Trust Agreement are appropriately tailored to ensure Conflicted
Managers will be recused from such meetings and decisions and
will not have access to any privileged materials or related
information.
• In the event that the Liquidating Trustee determines to abandon any
claim objections or Retained Causes of Action, the Liquidating Trustee
must provide sufficient notice to Liquidating Trust Beneficiaries to give
them adequate opportunity to object; and
o The Plan Proponents do not believe that this is a valid concern
because the abandonment of material claim objections or
In re Yellow Corporation, et al., No. 23-11069
September 12, 2025
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Retained Causes of Action will require Bankruptcy Court
approval after notice and an opportunity for hearing.
e Removal of the bar on seeking derivative standing for Liquidating Trust
Beneficiaries with respect to any claim objections or Retained Causes of
Action that the Liquidating Trustee seeks to abandon or settle.
o As noted above, the Plan Proponents do not believe that this is
necessary because the Liquidating Trustee will be required to
seek Bankruptcy Court approval for the abandonment or
settlement of material claim objections or Retained Causes of
Action.
Subject to the addition of an insert consistent with the language set forth
above, the Court is prepared to enter an order approving the disclosure statement.
The parties are directed to settle an order so-providing under certification of counsel.
Sincerely,
i
Craig T. Goldblatt
United States Bankruptcy Judge