The older they are, they harder they fall. That is the unfortunate lesson of Yellow Corp, a trucking company that has been around for almost 100-years.
The company recently filed bankruptcy, and this left 30,000 workers unemployed. And because the company took a $700 million loan from the US government to stay afloat during the pandemic, taxpayers may also be stuck with a huge loss.
Yellow was the third-largest carrier in the less-than-truckload space, behind FedEx and Old Dominion. Their Chapter 11 bankruptcy is expected to be the largest bankruptcy in the history of the country.
The bankruptcy was no surprising, however. In addition to the loan taken out during the COVID crisis, Yellow recently made a deal that narrowly avoided a strike from the Teamsters union and resulted in them paying out $50 million in wages and benefits that they owed to their workers.
Yellow also tried to restructure its business in a move that it claimed would allow it to refinance its debt. This restructuring move was stopped, and Yellow sued the Teamsters union for blocking the plan. The International Brotherhood of Teamsters, a union that represented about 22,000 of Yellow’s workers, responded that there was no merit to the lawsuit.
Yellow CEO Darren Hawkins said that the Teamsters union “was able to halt our business plan, literally driving our company out of business”.
But in a lengthy rebuttal to the ailing company, the Teamsters released a statement including the line that, “Teamster families sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow. The company blew through a $700 million government bailout. But Yellow’s dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don’t”.
Yellow claims that they plan to pay back the $700 loan to the tax payers, a total that could only be reached with a fire sale of Yellow’s properties and vehicles, but the US government has already warned the public that many of these pandemic-related investments may result in losses. Specifically, the Treasury Department holds a 31% stake in Yellow, as a result of the loan.