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ShareThisPension Plans Could Push YRC Into Bankruptcy
Troubled carrier negotiating with funds to avoid default on credit agreement
Teamster multi-employer pension plans are seeking a higher interest rate on deferred pension obligations owed by YRC Worldwide, throwing up a potential stumbling block for the troubled trucking giant as it struggles to reorganize.
The action by the pension funds constitutes a "milestone failure" under YRC Worldwide's credit agreement, and was reported as such in the 10-K annual report YRC filed Tuesday with the U.S. Securities and Exchange Commission.
The conflict with its pension plans could lead YRC's creditors to declare the company in default, which would likely drive the carrier into bankruptcy protection.
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However, YRC's banking group hasn't indicated they will declare default, and the group's agent has recommended against it "at this time," the company said.
"We are continuing to work with the parties to satisfy" the conditions of the restructuring agreement, the company said in its SEC filing.
If YRC's lenders were to declare an event of default, "we anticipate that we would seek protection under the U.S. bankruptcy code," the company said.
-- Contact William B. Cassidy at wcassidy@joc.com.
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YRC should just file already and get on w/ life. There is value in this company but they are losing focus w/ all this BK distraction. The attitude on the dock is suspect and this leads to service failures which furthers the downward spiral of revenue. Certainly the union's lawyers are advising the Teamsters to force the issue now. The union will get a UAW-style ownership stake in YRC from their Obama friends who at that point will be in the thick of the re-election campaign.