YRCAA Chapter 11 Filing: Shutdown, Creditors, and Employee Recovery

Yellow Corporation, once one of the largest less-than-truckload trucking companies in the country, shut down in late July 2023 and filed for Chapter 11 bankruptcy on August 6, 2023 in the U.S. Bankruptcy Court for the District of Delaware. The court confirmed a liquidation plan on November 19, 2025. Asset sales produced about $2 billion, and general unsecured creditors are projected to recover roughly 18.7 cents on the dollar. Shareholders are expected to receive nothing.

The Shutdown and Filing

Yellow’s management concluded on July 26, 2023 that the company had no viable path forward and began an orderly shutdown. Yellow and twenty-three affiliated entities filed for Chapter 11 on August 6 and 7, 2023, under Case No. 23-11069.¹ The filing was never aimed at reorganizing the business. From the start, Yellow used Chapter 11 to sell everything and distribute proceeds.

About 30,000 workers lost their jobs, making it the largest trucking failure in U.S. history. Roughly 22,000 were represented by the International Brotherhood of Teamsters; the rest were non-union staff. Customers with freight in transit and hundreds of vendors were left to file claims.

Where the Money Went

Yellow’s most valuable assets were its owned freight terminals. An auction of about 130 terminals brought in close to $1.9 billion. The estate also sold roughly 12,000 tractors and 35,000 trailers. Total sale proceeds came to approximately $2 billion.²

Most of that money did not reach general creditors. Secured debt of about $1.2 billion was paid first, along with $213 million in debtor-in-possession financing that kept the bankruptcy running. That left roughly $600 million available for lower-priority creditors under the court’s conservative estimate, against $1.66 billion in general unsecured claims. By late 2025, the distributable pool had drifted closer to $700 million as ongoing litigation and administrative costs continued to consume value.

Included in the paid-off secured debt was a $700 million loan the U.S. Treasury made to Yellow in 2020 under the CARES Act, when the company was deemed critical to national security.³ The estate repaid the principal in full plus more than $151 million in interest. Treasury also held a 29.6% equity stake through a voting trust, valued at around $72 million at the time of repayment. That equity is treated like any other shareholder interest and will almost certainly recover nothing.

Who Gets Paid First

Bankruptcy law sets a strict order. No group at a lower tier receives anything until every group above it is paid in full.

Secured creditors collect first, from the sale of their collateral. Yellow’s secured debt totaled about $1.2 billion.
Administrative expenses, including professional fees and the debtor-in-possession lenders, are paid next.
Priority unsecured claims come after that. Employee wage claims qualify up to $15,150 per person for cases filed before April 1, 2025, along with some tax obligations and benefit plan contributions.⁴⁵
General unsecured claims sit below that. Vendors, suppliers, pension withdrawal liability, and any employee amounts above the priority cap fall into this pool, estimated at $1.66 billion in allowed claims.
Post-petition interest on unsecured claims is only owed if the estate can pay every unsecured claim in full first.⁶
Shareholders come last and receive nothing unless everyone above them is paid in full, including that interest.

The court’s low-case projection put the general unsecured recovery at about 18.7% under the confirmed plan, compared to roughly 16% under a hypothetical Chapter 7 liquidation.² Those numbers can still shift as disputed pension claims and other litigation resolve.

What Former Employees Can Recover

Former Yellow workers hold several different types of claims, and the outcomes are not the same across categories.

Wages and Benefits

Unpaid wages, accrued vacation, sick leave, and severance earned within 180 days before the filing get priority treatment up to $15,150 per person.⁴ Priority claims are paid before general unsecured claims. Anything you were owed above that cap drops into the general unsecured pool at the projected 18.7% recovery rate. Employee benefit plan contributions carry their own priority, also capped by statute.

WARN Act Claims

Thousands of former employees filed claims alleging Yellow violated the federal Worker Adjustment and Retraining Notification Act by not giving 60 days’ advance notice of the mass layoffs. In a February 2025 opinion, the bankruptcy court found that Yellow was acting as a “liquidating fiduciary” rather than an employer when it ordered the union workforce terminated, and disallowed the union employees’ WARN Act claims in full.⁷ In the alternative, the court ruled that even if the WARN Act did apply, damages should be reduced from 60 days to 14 days of back pay and benefits, citing the circumstances of the rapid shutdown. More than 4,000 non-union employees asserted separate WARN Act claims. The ruling may be appealed, so it is not necessarily the last word.

Pensions

When Yellow stopped operating, it withdrew from every multiemployer pension plan covering its union workers. Federal law makes an employer that withdraws from such a plan owe “withdrawal liability” equal to its share of the plan’s underfunding. Eleven multiemployer plans filed 174 proofs of claim seeking a combined $6.5 billion.⁸ The Central States Pension Fund held the largest.

The core dispute was whether $35.8 billion in federal Special Financial Assistance that Central States received in January 2023 counted as plan assets for the withdrawal liability calculation. The Pension Benefit Guaranty Corporation’s regulations say SFA must be phased in gradually and funds not yet received cannot be counted. In September 2025, the Third Circuit upheld those regulations.⁸ The result cuts the pension funds’ allowed claims sharply. Five separate plans that did not receive SFA filed claims totaling about $540 million, with disputes still being resolved over the discount rates they used.⁹ For individual retirees, pension benefits themselves are paid by the plans, not directly by the Yellow estate; the withdrawal liability dispute affects how much the plans recover from Yellow, not what participants receive from their plan.

Health Coverage

Workers who lost employer-sponsored health insurance at the shutdown were eligible for COBRA continuation coverage for up to 18 months by paying the full premium themselves.¹⁰ For anyone terminated in July or August 2023, that window closed by early 2025. If you elected COBRA, you should already have moved to a marketplace plan or other coverage.

What Vendors and Other Unsecured Creditors Can Expect

Vendors, suppliers, and customers with freight lost or damaged during the shutdown fall into the general unsecured pool. The projected recovery is about 18.7%, paid out through the liquidating trust created by the confirmed plan. The general deadline to file a proof of claim was November 13, 2023, and government entities had until February 5, 2024.¹

If you missed the deadline, your claim may still be considered tardily filed, but it sits below timely general unsecured claims and is paid only if timely claims are satisfied in full.⁶ With timely creditors projected to recover under 19 cents on the dollar, late filers are unlikely to see anything. Epiq Corporate Restructuring is the official claims agent and maintains the claims register.

What Shareholders Can Do

Yellow’s common stock is effectively worthless. The confirmed plan pays equity holders only if every unsecured creditor is paid in full plus post-petition interest, which the court described as “seemingly unlikely (but still conceivable).”² With unsecured creditors themselves recovering under 19%, there is no realistic path to a shareholder distribution.

You can, however, claim a capital loss for tax purposes. When a security becomes wholly worthless, the IRS treats the loss as if the stock were sold on the last day of that taxable year for zero.¹¹ You must permanently surrender all rights in the security and receive nothing in return. It is treated as a capital loss subject to the normal annual deduction limits. The loss is generally reported for the year the stock became worthless, so a tax professional can help you pin down the correct year and document the claim.

What’s Still Unresolved

MFN Partners, which holds both Yellow debt and equity, filed a notice of appeal on November 18, 2025 and amended it after the confirmation order issued the next day. The appeal could delay final distributions from the liquidating trust. Yellow also has a reinstated breach-of-contract lawsuit against the International Brotherhood of Teamsters that could bring more money into the estate if it succeeds. The confirmation judge warned that extended litigation “has a way of consuming value,” and the distributable pool has already shrunk as the case has gone on.

1
Epiq. Yellow Corporation Bankruptcy Overview Case 23-11069
2
U.S. Bankruptcy Court for the District of Delaware. Yellow Corporation Confirmation Opinion
3
U.S. Department of the Treasury. Treasury to Provide Loan to YRC Worldwide
4
Office of the Law Revision Counsel. 11 USC 507 – Priorities
5
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
6
Office of the Law Revision Counsel. 11 USC 726 – Distribution of Property of the Estate
7
U.S. Bankruptcy Court for the District of Delaware. Yellow Corporation WARN Act Claims Opinion
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