On August 6, Yellow Corp (formerly known as YRC Worldwide), a prominent U.S. trucking firm with nearly a century of history, filed for Chapter 11 bankruptcy protection.
The company had accumulated a substantial debt burden due to a series of mergers and challenging contract negotiations with the Teamsters Union.
Yellow’s bankruptcy filing, submitted to a Delaware court, disclosed estimated assets and liabilities ranging from $1 billion to $10 billion, and it currently has over 100,000 creditors.
In a statement on Sunday, Yellow’s CEO, Darren Hawkins, expressed deep disappointment as the company announced its closure after nearly a century of operation.
As one of the largest U.S. trucking companies, Yellow has been a major player in the “less-than-truckload” (LTL) segment, transporting cargo for multiple customers on a single truck.
Some of its notable clients include retail giants like Walmart and Home Depot, as well as manufacturers and Uber Freight.
Nevertheless, some customers halted shipments to Yellow, fearing they would face losses or become stranded if the company went bankrupt.
The bankruptcy filing follows an announcement by the Teamsters Union, made late the previous month, regarding Yellow’s cessation of operations.
The company had been engaged in contentious negotiations with the union over an internal restructuring initiative aimed at enhancing efficiency.
While a strike by 22,000 Teamsters-represented workers was narrowly avoided, Yellow resorted to suing the union in Kansas federal court to prevent the strike, asserting that the union’s refusal to negotiate had pushed the company to the brink of collapse.
In June, Yellow claimed that the Teamsters Union obstructed restructuring and modernization efforts collectively referred to as “One Yellow.”
The company argued that these efforts were vital for its survival and ability to refinance around $1.3 billion of debt due to be repaid by 2024.
The Teamsters’ actions allegedly caused significant concern among investors, drove away customers, and jeopardized 30,000 jobs, according to Yellow’s statement.
The burden of liabilities from its acquisitions of Roadway in 2003 and USF in 2005 weighed heavily on Yellow, and it reported a total debt of $1.5 billion in the previous year, based on Refinitiv data.
In an additional concerning development, U.S. taxpayers may face potential losses if Yellow fails to repay a $700 million loan issued by the administration of former President Donald Trump in 2020.
The loan was intended to bail out the long-troubled and poorly managed trucking firm under a pandemic relief program.