YRCAA Chapter 11: Payouts, WARN Ruling, and Employee Claims

The Yellow Corporation bankruptcy is a Chapter 11 liquidation, not a reorganization. The trucking company shut down in late July 2023, filed in the U.S. Bankruptcy Court for the District of Delaware on August 6, 2023, and sold off its terminals, tractors, and trailers for roughly $2 billion. In November 2025 the court confirmed a liquidation plan projecting that general unsecured creditors will recover about 18.7% of their allowed claims, while shareholders are almost certain to receive nothing.¹

The Shutdown and the Filing

Yellow’s management concluded on July 26, 2023, that there was no viable path forward and began an orderly shutdown.² Yellow and twenty-three affiliated companies then filed Chapter 11 petitions on August 6 and 7, 2023, under Case No. 23-11069.³ Chapter 11 ordinarily contemplates reorganization, but Yellow used it strictly to liquidate.

Roughly 30,000 workers lost their jobs, about 22,000 of them represented by the International Brotherhood of Teamsters. It was the largest single failure in U.S. trucking history, and the speed of the collapse left employees, in-transit freight customers, and hundreds of vendors scrambling to protect their claims.

What the Estate Collected and Paid Out

The most valuable assets were Yellow’s owned freight terminals. An auction of roughly 130 terminals brought in close to $1.9 billion, with Estes Express Lines setting the floor with a $1.525 billion stalking-horse bid. The estate also sold about 12,000 tractors and 35,000 trailers through separate auctions. Combined proceeds came to approximately $2 billion.¹

From those proceeds, the estate paid roughly $1.2 billion in secured debt and $213 million in debtor-in-possession financing used to run the bankruptcy. A major piece of the secured debt was a $700 million CARES Act loan the U.S. Treasury extended to Yellow in 2020 after designating it critical to national security.⁴ Yellow repaid the full $700 million principal plus more than $151 million in interest. The 29.6% equity stake Treasury received in exchange sits at the bottom of the priority stack along with every other shareholder interest.

After secured debt and administrative costs, the court estimated about $600 million would remain for distribution to lower-priority creditors in a conservative scenario. By late 2025 that figure had slipped to around $700 million being eroded by ongoing litigation costs, with the judge warning that extended fights “have a way of consuming value.”

Who Gets Paid, and in What Order

Bankruptcy law pays creditors in a strict order. No tier receives anything until every tier above it is paid in full.

Secured creditors collect first from the collateral backing their loans. Yellow’s roughly $1.2 billion in secured debt, including the Treasury loan, has already been paid.
Administrative expenses, including professional fees and the DIP financing, come next.
Priority unsecured claims follow. These include certain employee wage, vacation, severance, and benefit-contribution claims up to a per-person dollar cap, plus some tax obligations.⁵
General unsecured claims are the largest class, with allowed claims estimated at $1.66 billion. Vendors, suppliers, pension withdrawal liability, and the portion of any employee claim above the priority cap all sit here.
Post-petition interest on unsecured claims is owed only if everything above gets paid in full.⁶
Equity holders are last.

Under the confirmed plan’s low-case projection, general unsecured creditors receive about 18.7% of their allowed claims, compared with roughly 16% in a hypothetical Chapter 7 liquidation.¹ Those percentages can still move as contested pension claims and other litigation resolve.

What Former Employees Can Recover

Workers hold several different claims in this case, and the court has already ruled on some of them in ways that significantly affect recoveries.

Priority Wages, Vacation, and Severance

Unpaid wages, accrued vacation, sick leave, and severance earned within 180 days before the filing qualify for priority treatment up to $15,150 per person. That cap applies to cases filed before April 1, 2025; cases filed on or after that date use a $17,150 cap.⁵⁷ Yellow filed before that date, so the $15,150 cap applies. Priority amounts get paid ahead of general unsecured creditors; anything above the cap drops into the general unsecured pool and is subject to the roughly 18.7% recovery projection. Employee benefit plan contributions have a separate but similar priority with its own dollar limit.

The WARN Act Ruling

Thousands of former employees claimed Yellow violated the Worker Adjustment and Retraining Notification Act by failing to give 60 days’ notice of the mass layoffs. In a February 2025 opinion, the bankruptcy court held that Yellow was acting as a “liquidating fiduciary” rather than a traditional employer when it ordered the union workforce terminated, and that union employees’ WARN Act claims should be disallowed on that basis.² In the alternative, the court ruled that even if Yellow were covered by WARN, damages should be cut from 60 days to 14 days of back pay and benefits per employee because of the circumstances of the shutdown. More than 4,000 non-union employees asserted separate WARN Act claims. The ruling may be appealed, so it is not necessarily the final word.

Pension Withdrawal Liability

The biggest contested dollar figures involve multiemployer pension plans. When Yellow stopped operating, it withdrew from the plans covering its union workforce, triggering withdrawal liability under federal law. Eleven plans filed 174 proofs of claim seeking a combined $6.5 billion.⁸ The Central States Pension Fund held the largest claim.

The central legal question was whether the $35.8 billion in Special Financial Assistance Central States received from the federal government in January 2023 should count as plan assets when calculating what Yellow owed. The Pension Benefit Guaranty Corporation issued regulations saying SFA funds must be phased in gradually and that funds awarded but not yet received cannot be counted at all. In September 2025 the Third Circuit upheld those regulations.⁸ The practical effect is a substantial reduction in the pension funds’ allowed claims against the Yellow estate.

A separate group of five plans that did not receive SFA filed claims totaling about $540 million, with the bankruptcy court working through disputes over the discount rates those plans used.⁹

Health Coverage

Employees who lost employer-sponsored health insurance when Yellow shut down were eligible for COBRA continuation coverage for up to 18 months by paying the full premium themselves.¹⁰ For workers terminated in July or August 2023, that window has closed, and anyone who elected COBRA would have needed to move to marketplace or other employer coverage by early 2025.

Vendors, Customers, and Other Creditors

The general bar date for filing proofs of claim against Yellow was November 13, 2023. Governmental units had until February 5, 2024.³ A claim filed after the general bar date is treated as tardily filed and sits below timely general unsecured claims in the distribution order, receiving payment only if timely unsecured claims are satisfied first.⁶ With timely unsecured creditors projected to recover under 19 cents on the dollar, late filers face very long odds.

Customers whose freight was lost or damaged during the shutdown had the same November 2023 deadline. Epiq Corporate Restructuring remains the official claims agent and maintains the claims register.

What Shareholders Should Do

Yellow’s common stock is effectively worthless. The confirmation opinion describes any shareholder distribution as possible only in the “seemingly unlikely (but still conceivable)” event that all unsecured creditors are paid in full, including post-petition interest.¹ At a projected sub-19% recovery for unsecured claims, there is no realistic path to equity.

Shareholders can still claim a capital loss. When a security becomes wholly worthless, the IRS treats the loss as if the stock were sold on the last day of the taxable year for zero proceeds.¹¹ You must surrender all rights in the security permanently and receive nothing in return. The loss is a capital loss and is subject to the usual annual deduction limits. If you still hold Yellow stock and have not claimed the deduction, the worthless security loss is generally reported for the tax year in which the stock became worthless, and a tax professional can help you identify the correct year and document the claim.

What’s Still Open

The November 19, 2025 confirmation order is on appeal. MFN Partners, a fund holding both Yellow debt and equity, objected to the plan and filed a notice of appeal on November 18, 2025, which it amended after the confirmation order issued the next day. The appeal could delay final distributions. The estate also has a reinstated breach-of-contract lawsuit against the Teamsters that could add to the pool if it succeeds. Final recovery percentages for unsecured creditors depend on how those matters, and any further pension claim rulings, resolve.

1
U.S. Bankruptcy Court for the District of Delaware. Yellow Corporation Confirmation Opinion
2
U.S. Bankruptcy Court for the District of Delaware. Yellow Corporation WARN Act Claims Opinion
3
Epiq. Yellow Corporation Bankruptcy Overview Case 23-11069
4
U.S. Department of the Treasury. Treasury to Provide Loan to YRC Worldwide
5
Office of the Law Revision Counsel. 11 USC 507 – Priorities
6
Office of the Law Revision Counsel. 11 USC 726 – Distribution of Property of the Estate
7
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
8
Justia Law. In Re Yellow Corporation No 25-1421
9
U.S. Bankruptcy Court for the District of Delaware. Yellow Corporation Withdrawal Liability Opinion
10
USAGov. Learn About COBRA Insurance and How to Get Coverage
11
eCFR. 26 CFR 1.165-5 – Worthless Securities