Following up on the closing of operations on July 28, U.S. LTL trucking services provider Yellow formally filed for voluntary bankruptcy in U.S. Bankruptcy Court in Delaware late Sunday.
The development represents the failure of one the largest U.S. trucking companies since 2019 when LTL carrier New England Motor Freight liquidated.
CEO Darren Hawkins indicated in announcing of this filing: “It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business”
The trucking company will reportedly seek bankruptcy court authorization to make payments including salaries and benefits.
According to reporting by The Wall Street Journal, the trucking firm has lined up a loan to finance its Chapter 11 phase including the disposal of assets. Reportedly 30 unsecured creditors are listed including BNSF Railway and retailers Amazon and Home Depot.
In 2020, at the height of the Covid-19 pandemic related shutdowns, the U.S. government approved a $700 million bailout loan for Yellow based on the carriers deemed critical trucking services. The loan came despite the U.S. Department of Defense indication that the carrier’s services were not deemed essential. The federal government reportedly received upwards of 30 percent equity stake as a result of the loan. In May, a government oversight agency indicated that the trucking firm had only repaid $230 million of the principal of that loan. With the formal Chapter 11 filing, it remains to be seen how much more of the government loan will be repaid. The Wall Street Journal indicated in its reporting that in addition to the U.S. government, Yellow owed more than $500 million to private equity firm Apollo Global Management at the end of Q1.
This closure impacts upwards of 30,000 employees, 22,000 of which are unionized, along with dozens of U.S. terminals and upwards of 22,000 trucks. In the filing, CEO Darren Hawkins pointed a finger at the Teamsters labor union: “All workers and employers should take note of our experience with the International Brotherhood of Teamsters (“IBT”) and worry,” said Hawkins. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.” The labor union has since released a statement: “Teamsters have kept this company afloat for more than a decade through billions of dollars in wage, pension and work rule concessions. Yellow couldn’t manage itself, and it wasn’t up to Teamsters to do it for them.”
There are separate reports indicating that since the closure of operations, the company’s stock has included buying activity from a number of speculators including a private equity firm, each seeking to gain from the asset disposal period.
From an industry perspective, there appears to be on the surface little impact to trucking shipment activities, estimated to be upwards of 50,000 daily shipments. As noted in our last update, leading up to this formal action, many shippers and brokers had already routed freight shipments among other existing LTL carriers.
Existing carriers will likely have interest in the sale of specific Yellow truck terminals and experienced workers to enhance their own operations.
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