Mon 08/07/2023 06:18 AM
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Relevant Document:
First Day Declaration
DIP Financing Motion
Bidding Procedures Motion
Adversary Complaint

Early this morning the Yellow Corp. debtors filed the first day declaration of chief restructuring officer Matthew Doheny and several substantive first day motions, including a DIP financing motion and bidding procedures motion. The debtors seek approval of a $142.5 million new-money senior secured DIP facility from prepetition B-2 term lenders that would also roll up approximately $502 million in B-2 term loans.

The new money DIP funds would be available on the following milestones:

  • $60 million upon interim approval;

  • $37.5 million upon the entry of the bidding procedures order;

  • $20 million upon the debtors’ receipt of “unique, non-duplicative binding bids for the DIP Priority Collateral that would, in the aggregate, generate net cash proceeds equal to at least $250 million”; and

  • $25 million upon the debtors’ receipt “of unique, non-duplicative binding bids for the DIP Priority Collateral that would, in the aggregate, generate net cash proceeds equal to at least $450 million.”

The bid procedures motion contemplates the following sale timeline:

According to the first day declaration, the debtors have approximately $1.2 billion in total funded debt obligations, consisting of a $485.4 million senior secured term loan, and approximately $737 million in US Treasury term loans, and $0.9 million in borrowings under an ABL Facility. They also have approximately $359 million in undrawn letters of credit supporting workers compensation under the ABL facility.

The debtors provide the following summary of their prepetition debt:

The DIP motion indicates that the debtors filed with approximately $39 million in cash on hand.

Early this morning the company was also promptly slapped with a class action adversary complaint for WARN Act violations brought by a putative class of former employees of Yellow Corp, YRC Freight, USF Holland LLC, New Penn Motor Express LLC and USF Reddaway Inc.

The first day declaration, like the debtors’ overnight press release, indicates that the debtors entered chapter 11 “to effectuate an orderly, value-maximizing winddown of their businesses.” Yellow will spend its time in chapter 11 marketing substantially all of its assets to one or more buyers and taking actions to preserve the value of their assets and clearing freight from their network, Doheny says.
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