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Yellow Corp. files for Chapter 11 bankruptcy protection as the US trucking firm closes its 99-year-old business
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Management and the Teamsters union trade blame for Yellow’s closure
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Some 30,000 Yellow workers face unemployment risk as the industry reels from falling volumes
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Yellow was the third-biggest US trucker specializing in LTL cargo
US trucking company Yellow Corp. is seeking Chapter 11 bankruptcy protection as it stops its 99-year-old business, leaving its 30,000 workers facing the prospect of unemployment in an industry reeling from decreasing cargo volumes, US media reported.
The filing was made in the US Bankruptcy Court for the district of Delaware, Yellow said on August 6, accusing the Teamsters Union of “driving it out of business” and sparking an angry retort from the labor group over the company’s financial management.
Before its closure, Yellow was the third-biggest US trucker specializing in less-than-truckload (LTL) cargo that combines shipments from different customers in the same trailer.
Formerly called YRC Worldwide, Yellow blamed the Teamsters for hastening its demise by opposing a restructuring plan. The union responded on August 7 that the company mismanaged a US$700 million federal loan and charged it with failing workers.
“Yellow’s dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don’t,” Reuters quoted Teamsters president Sean O’Brien as saying. “They shamelessly pin their corporate incompetence on working people.”
Yellow averted a threatened strike by its 22,000-odd Teamsters-represented workers as talks with the union over a new contract with better terms were deadlocked. The company had 30,000 employees including non-union members.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow chief executive Darren Hawkins issued a statement on 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. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
His announcement came a week after the company closed down its offices across the United States and sent notice on its company closure to its employees and customers.
Yellow said it was discontinuing its operations as its attempt to restructure and refinance debt estimated at US$1.5 billion failed.
Yellow is expecting an agreement with its creditors, pending approval from the court, that will allow it to pay certain wages and benefits, as well as some obligations to vendors and suppliers.
The company disclosed a long list of creditors in its court filing, with Amazon , Home Depot and Goodyear Tire & Rubber Co. among the top 30 with unsecured claims, CNN reported.
While the non-union LTL carriers started with a significant cost advantage, repeated concessions by the Teamsters union helped close much of that gap. So did a shortage of drivers nationally, which helped lift wages at the non-union carriers.
Yellow started taking on debt to buy many of its unionized rivals, including Roadway for nearly $1 billion in 2004, according to CNN.
The company had about $1.5 billion in long-term debt on its balance sheet in its most recent financial report. Nearly half that debt came from the $700 million pandemic relief loan it received from the federal government in 2020, with the US Treasury taking a 30% stake in the company in return. Those shares have lost nearly all their value since then, CNN said.
