(Bloomberg) — Defunct cargo hauler Yellow Corp. may put its remaining cargo terminals and other vacant properties into a real estate investment trust that could be used to raise money for creditors, bankruptcy advisers for the company told a judge Monday.
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The proposal was made public during a bankruptcy court fight in Wilmington, Delaware between company officials and a committee of lower-ranking creditors. Previously, the company had said it would likely liquidate the 125 properties it was unable to sell last year during a court-supervised auction.
“We have valuable property,” Chief Restructuring Officer Matthew Doheny testified during a bankruptcy hearing. In the coming weeks Doheny and other advisers will test investor appetite for a new company built on the carcass of Yellow. The cargo hauler shut down and filed bankruptcy last year following a battle with the Teamsters union, which represented tens of thousands of company drivers.
The goal is to find out if the company can raise more cash for creditors by keeping the properties than by liquidating them, Doheny said. Should the company raise enough money and successfully challenge some of the $10 billion in claims it currently faces, shareholders could wind up collecting something in the case, he said. Normally shareholders are wiped out in big corporate bankruptcy cases.
One option would be to create a real estate investment trust to hold at least some of Yellow’s properties, according to court testimony. The company owns 47 locations and has long-term leases on another 78, testimony and court documents show.
After filing bankruptcy in August, Yellow set off a frenzy among other truckers looking to buy up valuable terminals that Yellow acquired over the decades it operated. Eventually, the company sold about 130 locations for nearly $2 billion.
The company was in court Monday seeking more time to file a plan to end its bankruptcy. An official committee of unsecured creditors tried, unsuccessfully, to terminate Yellow’s exclusive right to put together a reorganization plan. Creditor attorney Meredith Lahaie argued that Yellow’s bankruptcy was costing about $20 million a month, mainly because the company was wasting time fighting various pension claims instead of trying to settle the disputes.
US Bankruptcy Judge Craig Goldblatt rejected the committee’s demand and gave Yellow another 90 days to file its proposal.
The case is Yellow Corp., 23-11069, US Bankruptcy Court District of Delaware (Wilmington).
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