U.S. trucking firm Yellow Corporation filed for Chapter 11 bankruptcy protection on Aug. 6 and said it would wind down, after struggling with a mounting debt load and having failed to find a way through tense contract negotiations with the Teamsters Union.
“It is with profound disappointment that Yellow announces that it is closing,” CEO Darren Hawkins said in a statement (pdf) on Sunday.
The collapse of the nearly 100-year-old company, formerly known as YRC Worldwide, threatens the employment of 30,000 workers at a time when the freight industry is grappling with diminishing volumes.
Prior to its demise, Yellow was the third-largest less-than-truckload (LTL) carrier by revenue, behind FedEx and Old Dominion. LTL companies typically move pallet-sized shipments that are too small to justify their own container or truck, but are bigger than a parcel.
Yellow’s clients include large retailers such as Walmart, Home Depot, and Uber Freight. Some companies had already paused shipments to Yellow over fears that goods could get lost or held up indefinitely should the trucking firm go bankrupt. Others, like Walmart, had begun diversifying their transportation network in anticipation of Yellow’s bankruptcy.
The company’s Chapter 11 filing in a Delaware court listed more than 100,000 creditors, with estimated assets and liabilities of between $1 and $10 billion.
Yellow has $1.3 billion in debt payments coming due in 2024, including a $567.4 million private-equity term loan in June and the U.S. loan in September.
Yellow said on Aug.6 that it intends to pay back in full a $700 million loan former President Donald Trump’s administration issued to bail out the long-troubled firm in 2020 under a pandemic relief program.
The company also has a $450 million secured revolving loan from a syndicate of banks arranged by Citizens Bank, Merrill Lynch, and others that expires in January 2024.
“Yellow may try to use the courts to eradicate its financial responsibilities, but they can’t escape the truth,” said Teamsters general president Sean O’Brien in a statement on Aug. 7. “Teamster families sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow. The company blew through a $700 million government bailout. But Yellow’s … C-suite failed to take responsibility for squandering all that cash. They still don’t.”
According to a Congressional Oversight Commission report issued in June, Yellow gave the U.S. Treasury 15.9 million shares of its common stock— a 30.6 percent stake—as additional security for the loan.
“This leaves the taxpayer the last creditor to get repaid,” the authors of the report wrote.
The filing comes after the Teamsters Union said late last month that it had been notified that the company was ceasing operations.
Yellow has been in negotiations with the union over an internal restructuring initiative meant to boost efficiency. It recently averted a strike by 22,000 Teamsters-represented workers.
In its statement, subtitled “International Brotherhood of Teamsters Drives Nearly 100-Year-Old Company Out of Business,” the company accused the organization of driving Yellow into bankruptcy after “nine months of union intransigence, bullying, and deliberately destructive tactics.”
For its part, the Teamsters Union had previously accused the company of “decades of gross mismanagement” that it said caused Yellow Corp. to fail despite worker concessions and a federal bailout.
Reuters contributed to this article.
