Yellow Corp.’s bankruptcy may trouble U.S. trucking
The 99-year-old less-than-truckload carrier, Yellow Corp., has filed for bankruptcy after years of financial problems and mounting debt.
The Nashville, TN- based company employed over 30,000 people in the U.S. It was one of the country’s largest medium-capacity transportation companies.
In its Chapter 11 filing in a Delaware court on Aug. 6, the company estimated assets of $2.15 billion and liabilities of $2.59 billion. It expects to enter a debtor-in-possession (DIP) financing agreement to provide liquidity to sell its assets and to pay wages and vendors.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” says Yellow CEO Darren Hawkins in a statement Sunday. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. Yellow provided hundreds of thousands of Americans for generations with solid, good-paying jobs and fulfilling careers.”
Yellow had been dragging financial issues for some time which industry analysts attributed to poor management and strategic decisions over decades, which caused it to close all operations on July 30 after laying off hundreds of non-union employees.
The company had accumulated considerable debts. Last March they amounted to $1.5 billion, of which $729.2 million was owed to the federal government.
In 2020, during the Trump administration, the Treasury Department granted the company a $700 million pandemic-associated loan on national security grounds.
A congressional inquiry recently concluded that the Defense and Treasury departments "made mistakes" in that decision, given the company's "precarious financial situation," which had "exposed taxpayers to a substantial risk of loss."
Additionally, the unionized company has been battling with the Teamsters Union, which represents about 22,000 drivers and dock workers at Yellow. A week ago the union canceled a threatened strike that had been prompted by the company failing to contribute to its pension and health insurance plans. The union granted the company an extra month to make the required payments.
While the union agreed not to go on strike against Yellow, it could not reach an agreement on a new contract with the trucking company.
The firm attributed the company's end to those nine months of negotiations, claiming that in that period it had been unable to establish a new business plan to modernize operations and become more competitive.
“Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry,” says Teamsters President, Sean O’Brien in a statement.