Yellow, a transportation company with a 99-year history, has filed for bankruptcy and is closing its doors due to accumulating debt, including a government loan and a dispute with the Teamsters union.
The bankruptcy is the culmination of years of adversity for the Nashville, Tennessee-based trucking company, which accumulated debt through a series of mergers and a $700 million federal Covid-19 relief loan during the pandemic. On July 30, the company ceased operations and laid off a significant number of employees.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” said Yellow’s chief executive, Darren Hawkins, when the company filed for chapter 11 bankruptcy protection late Sunday in Delaware.
There will be a loss of 30,000 jobs, of which 22,000 are held by International Brotherhood of Teamsters members.
The company stated that it will seek permission from the bankruptcy court to make payments, including wages, compensation, and benefits.
The company has secured a loan to finance its stay in chapter 11, which includes the sale of assets. Yellow possesses approximately 12,000 vehicles and dozens of freight terminals nationwide.
In its bankruptcy filing, Yellow listed 30 unsecured creditors, including BNSF Railway, Amazon.com, and Home Depot.
Yellow’s demise also eliminates a significant contributor to the Central States Pension Fund, a multiemployer pension fund that received a federal rescue in December as part of a program designed to stabilize nearly bankrupt retirement plans.
Rise and Fall: Yellow’s Legacy of Affordable Freight Transport and its Ongoing Struggles
Yellow was well-known for its low prices and for transporting freight across the country for Walmart, Home Depot, and numerous smaller companies. Despite acquiring competitors several years ago, obtaining union concessions over the past 15 years, and securing a government bailout in 2020, the company went into a financial tailspin this year due to a decline in shipping demand and a conflict with the Teamsters union over an operational restructuring effort.
Early in the twenty-first century, the company made several significant acquisitions but was sluggish to integrate the businesses. Several times within the past two decades, the company has avoided bankruptcy. The company avoided bankruptcy in 2010 after the Teamsters agreed to accept pay and benefit reductions.
This spring, the Teamsters blocked the company’s proposed operational reform, resulting in lost business with consumers and difficulties refinancing approximately $1.3 billion in debt due in 2024. Recently, Yellow announced that it was running out of cash and had employed an investment bank to resolve upcoming debt maturities. At the end of the first quarter, it owed approximately $700 million to the federal government and more than $500 million to private-equity firm Apollo Global Management.
Since the 1980s, almost all transportation company bankruptcies have resulted in liquidations, despite the fact that the majority of chapter 11 filers seek to maintain their businesses as continuing concerns.
In 2019, Celadon, a truckload carrier, and New England Motor Freight, a less-than-truckload carrier, both filed for chapter 11 and liquidated. According to one executive in the transportation industry, the goal of such filings is to retain some control over the liquidation of assets lost in a chapter 7 liquidation.