(Bloomberg) — Bankrupt trucker Yellow Corp. and its hedge fund owners lost a key court ruling over $6.5 billion in debt that pension funds claim the defunct company owes them, likely wiping out most recovery for shareholders.

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US Bankruptcy Judge Craig T. Goldblatt sided with pension funds over how to calculate the penalty Yellow must pay for canceling workers’ retirement plans when the company shut down last year. The ruling, issued last week, means there is little chance the company will have any cash left for shareholders like hedge fund MFN Partners after Yellow finishes selling its real estate portfolio and paying the pension penalty.

Goldblatt didn’t set a payment amount, but the ruling means the 11 pension funds involved have the upper hand in how that debt is calculated. Yellow last year sold its trucking terminals for $1.9 billion, enough to cover all of Yellow’s secured debt but not pension claims.

Shares, which had been trading above $5 most of this year, plunged a record 88% on Sept. 13, when the ruling was released. Shares were trading at 70 cents Tuesday.

The pension funds alleged Yellow is required to pay a “withdrawal liability” for canceling the retirement benefit. The funds asked Goldblatt to rule that billions of dollars in federal grant money they received from the US last year should be ignored when that liability is calculated. Yellow asked the judge to do the opposite.

The Pension Benefit Guaranty Corp., which regulates retirements funds like those set up for Yellow’s union workers, argued that other companies with traditional pension plans would have an incentive to cancel their retirement benefits if Yellow won since shareholders wouldnt be forced to pay a hefty penalty.

Yellow claimed it was unfair to make it pay the penalty since federal grants made the pensions solvent for decades.

The case is In re Yellow Corp., 23-11069, US Bankruptcy Court, District of Delaware (Wilmington)

–With assistance from Jonathan Randles.

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