Trucker Yellow Goes Bankrupt After Debt, Labor Woes Pile Up

(Bloomberg) — Yellow Corp. filed for bankruptcy and will remain shuttered after the trucking firm’s long-running financial woes were compounded by a dispute with its labor force.

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The carrier listed assets of $1 billion to $10 billion, and liabilities in the same range, in a Chapter 11 petition filed in Delaware. The filing gives Yellow breathing room from creditors while it winds down the business and sells off assets.

“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow Chief Executive Officer Darren Hawkins said in a statement. “For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

The shutdown will leave Yellow’s roughly 30,000 employees jobless, according to the statement. Yellow and the American Trucking Associations are launching a jobs database to help employees find work, the company said. The company also expects to obtain some fresh cash to fund its wind-down and pay certain wages accrued prior to the bankruptcy.

Nashville-based Yellow earlier notified union officials that it planned to file for bankruptcy after ceasing operations, according to a statement from the International Brotherhood of Teamsters. Trucking firms and other companies across the shipping industry have been burdened by a slowdown in freight demand coming out of the pandemic.

Read More: Trucking Firm Yellow Mulls Asset Sale Through Bankruptcy Filing

Yellow is the third-largest less-than-truckload carrier, meaning it accepts shipments that don’t fill a whole trailer. The company has been struggling financially as it stares down more than $1 billion of debt that matures in 2024.

It has also traded barbs with the International Brotherhood of Teamsters, blaming the union for gumming up plans to reshape its trucking divisions.

Bankruptcies tend to bite less-than-truckload carriers hard because shippers often divert their loads to competitors, weakening already-struggling companies in a manner similar to bank runs, Bloomberg Intelligence’s Lee Klaskow said in a July 27 note.

The US Treasury gave Yellow a $700 million pandemic-relief loan in 2020 that has since come under scrutiny. The debt made up 95% of what was dispersed under a Cares Act program to offset losses for businesses critical to national security, but Congressional investigators last year concluded the company was ineligible for the loan.

Yellow has faced years of financial stress. The company staved off a bankruptcy filing in 2009 after bondholders agreed to swap debt for equity, only to have to restructure again in 2011.

(Adds information from statement beginning in paragraph one.)

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