Troubled less-than-truckload carrier YRC Worldwide, may face bankruptcy as Teamsters seek a higher interest rate on deferred pension obligations owed by the company.
According to the 10-K annual report submitted by YRC to the Securities and Exchange Commission on Tuesday, the action by pension funds constitutes a “milestone failure” under YRC Worldwide’s credit agreement. If YRC’s creditors declare the company in default, the carrier may be forced into bankruptcy.
YRC has not indicated that it will default, and said in the SEC filing that it will continue to work toward satisfying the conditions of the restructuring agreement. However, the company did say that in the event of a default “we would seek protection under the U.S. bankruptcy code.”
According to a report on www.kansascity.com, in a memo to YRC employees, chief restructuring officer John Lamar said the multi-employer pension plans were given until March 10 to submit their non-binding agreement in principle – “which they did, except they indicated they will be seeking a higher interest rate on their deferred pension obligations.”
Lamar said that action wasn’t acceptable to “certain of the credit agreement lenders and thus constituted a ‘milestone failure’ under the company’s credit agreement,” reported the Kansas City Star’s website.
In his letter to employees, Lamar explained that the interest rate of the deferred pension note represents just one part of the restructuring effort, the website continues.
YRC Worldwide has been involved in a 401(k) Class Action Suit since 2009.
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