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Old Dominion Freight Line stepped up competition for bankrupt trucker Yellow’s sprawling North American real-estate holdings, outbidding a rival operator with a $1.5 billion offer for the properties, WSJ Pro Bankruptcy reported. The bid surpasses a $1.3 billion proposal by Estes Express Lines and signals a potentially spirited bankruptcy court-supervised auction for the network of 169 truck terminals that would provide Yellow with more than enough money to roughly cover the loans the company accumulated before its chapter 11 filing this month. Yellow was in business for 99 years before the company collapsed this summer. Its terminals include sought-after sites close to major metropolitan areas that are ideal for trucking and logistics companies looking to store and deliver goods quickly to homes. A lawyer for Yellow said earlier this month in bankruptcy court that the company had received formal expressions of interest in Yellow’s assets from almost 100 parties. Executives at several rival trucking companies have said they would be interested in buying some of Yellow’s locations. ODFL’s bid was disclosed in a court filing, setting up the Thomasville, N.C.-based operator as the stalking horse bidder, meaning its offer is subject to higher or better proposals at a court-supervised auction, for Yellow’s properties.

Yellow, a trucking company that filed for bankruptcy protection last Sunday, told a judge this week that it would fully repay the $729 million it owed the federal government by selling warehouses, trucks and other assets. But with its industry in a downturn, Yellow could struggle to get top dollar for its assets, the New York Times reported. Failure to pay back taxpayers in full would be an ugly conclusion to a three-year financial saga that began during the pandemic. The Trump administration handed a financial lifeline to Yellow, then called YRC Worldwide, in 2020, when the economy was in free fall and the company, which had been struggling before the coronavirus, was in danger of collapsing. Yellow’s most recent financial statements showed that its liabilities exceeded its assets by nearly $450 million at the end of June. But the company said this week that it expected to repay its debt to the government in full. The loan comes due in September 2024. The uncertainty about whether Yellow’s assets will be worth enough to pay the Treasury Department and private creditors does not surprise lawmakers and legal experts who have long raised questions about the company’s business and the federal loan granted to it.
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In related news, Yellow Corp. will extend negotiations on a bankruptcy loan until next week, seeking to explore at least two alternative loan proposals that would provide $142.5 million in new cash, the company's attorney said in court on Friday, Reuters reported. Yellow filed for bankruptcy on Sunday with a loan offer for that amount from private equity firm Apollo, a senior lender to the company before its bankruptcy. The trucking company said earlier this week it was seeking alternative financing from MFN Partners, an investment firm that owns 41% of Yellow's stock, and Estes Express Lines, a rival in freight trucking. Yellow is continuing to negotiate those offers, and it has received additional loan offers in the past few days, Yellow's attorney Pat Nash told U.S. Bankruptcy Judge Craig Goldblatt at a Friday court hearing in Wilmington, Delaware. Yellow will likely choose one of the loans, which are "much more favorable" than Apollo's initial proposal, by early next week, Nash said.
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All six bankruptcy courts to confront the question have held that debts of corporate debtors in Subchapter V of chapter 11 cannot be nondischargeable under Section 523(a) in nonconsensual plans, according to a special analysis in today’s Rochelle’s Daily Wire.. The Ninth Circuit Bankruptcy Appellate Panel has joined the horde by affirming Bankruptcy Judge Noah G. Hillen of Boise, Idaho, in holding that debts can be nondischargeable in Subchapter V only when the debtor is an individual. The bankruptcy judges and the BAP are aligned against the Fourth Circuit, which held that corporate debtors in Subchapter V may not discharge debts “of the kind” specified in Section 523(a). Cantwell-Cleary Co. v. Cleary Packaging LLC (In re Cleary Packaging LLC), 36 F.4th 509 (4th Cir. June 7, 2022). Bankruptcy Judge Craig A. Gargotta of San Antonio disagreed with Cleary and held that “corporate debtors proceeding under Subchapter V cannot be made defendants in § 523 dischargeability actions.” Avion Funding LLC v. GFS Industries LLC (In re GFS Industries LLC), 647 B.R. 337, 344 (Bankr. W.D. Tex. Nov. 10, 2022). The Fifth Circuit accepted a direct appeal in GFS in April. Briefing should be completed before September.

In a motion to stay the issuance of the mandate, the government has announced that it will be filing a petition for certiorari asking the Supreme Court to review the Second Circuit’s Purdue decision allowing bankruptcy courts to issue releases to nondebtors. The Second Circuit’s May 30 decision reversed the district court and reinstated the bankruptcy court’s confirmation of the chapter 11 plan of Purdue Pharma LP. The New York-based court of appeals held that chapter 11 plans may include nonconsensual releases of creditors’ direct claims against nondebtors. Purdue Pharma LP v. City of Grand Prairie (In re Purdue Pharma LP), 69 F.4th (2d Cir. May 30, 2023). The motion filed by the government on July 7 states that “the [U.S.] Solicitor General has determined to seek review of the panel’s decision in the Supreme Court” before the August 28 deadline. The government’s motion characterized Purdue’s chapter 11 plan as giving absolute, unconditional and permanent releases “from every conceivable type of opioid-related civil” claims to members of the Sackler family that owned and controlled the company.