No chance.
If the union wouldn't let A-Fraud take a few million $$$ paycut to go to Boston there is no way they let the Yanks get away with voiding a 80 something million dollar contract.
My guess is that they offer a buyout which will be tough for Giambi to accept.
In the end, I'm reaching here, I think the guy remains a Yankee. Think about it. How can he really accept a deal. If he takes a buyout where does he go? What does he do? I guess he can sign with another team for a few million but will another team want the PR mess and injury risk. How much would the Yanks have to offer him to even get to that point when basically he has all the leverage.
In my gut I think something HAS TO happen but looking at the situation today it could be very hairy. It is also possible that the issue is delayed by a suspension handed out by MLB.