US trucking firm Yellow files for bankruptcy after loading up on debt
2023.08.07 00:36
© Reuters. FILE PHOTO: Freight trucks are driven on the Fisher freeway in Detroit, Michigan March 27, 2009. REUTERS/Rebecca Cook/File Photo
(Reuters) -U.S. trucking firm Yellow Corp filed for Chapter 11 bankruptcy protection on Sunday, burdened with a heavy debt load after a series of mergers and following tense contract negotiations with the Teamsters Union.
The bankruptcy filing in a Delaware court lists estimated assets and liabilities of $1 billion to $10 billion and creditors of more than 100,000.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow’s CEO, Darren Hawkins (NASDAQ:), said in a statement.
Yellow, formerly called YRC Worldwide (NASDAQ:), is one of the largest U.S. trucking companies and a dominant player in the “less-than-truckload” (LTL) segment that hauls cargo for multiple customers on a single truck.
Customers include large retailers such as Walmart (NYSE:) and Home Depot (NYSE:), manufacturers and Uber (NYSE:) Freight. Some have paused shipments to the company on fears they could be lost or stranded if the carrier went bankrupt.
Yellow’s bankruptcy filing comes after Teamsters Union said late last month that it was notified that the company was ceasing operations.
The company has been in contentious negotiations with the union over an internal restructuring initiative meant to boost efficiency.
It recently averted a strike by 22,000 Teamsters-represented workers.
Before resolving the strike threat, Yellow sued the union in Kansas federal court, seeking to block a strike and saying that union’s refusal to negotiate had pushed the company to the “brink of extinction.”
The company’s struggles compounded with a steep drop in ecommerce shipments from early pandemic highs and an industrywide decline in freight volumes over the last year.
Yellow, saddled with liabilities from its purchases of Roadway in 2003 and USF in 2005, reported total debt of $1.5 billion last year, according to Refinitiv data.
U.S. taxpayers face potential losses if the company does not repay a $700 million-loan the administration of former President Donald Trump issued to bail out the long-troubled and poorly managed trucking firm in 2020 under a pandemic relief program.
