Years of Financial Hardships Lead Trucking Titan Yellow Corp. to Declare Bankruptcy

After years of financial difficulties and mounting debt, the trucking business Yellow Corp. filed for bankruptcy, signaling a huge shift for the nation’s shippers and the U.S. transportation sector.

Only three years had passed since Yellow got $700 million in federal loans during the pandemic era before filing into Chapter 11 bankruptcy.

Yellow, like other trucking companies in recent years, will collapse, and the United States will join other creditors unlikely to collect money loaned to the company. A Chapter 11 filing is intended to restructure debt while business operations continue.

Yellow experienced extreme financial strain as a result of years of subpar management and strategic choices extending back decades.

Celadon and New England Motor Freight, two trucking companies, petition for bankruptcy protection in 2019 and are subsequently liquidated.

According to analysts, former Yellow consumers and shippers may pay more as they switch to rivals like FedEx or ABF Freight. This is because Yellow formerly had the lowest pricing points in the sector.

One of the biggest less-than-truckload carriers in the country is Yellow, formerly known as YRC Global Inc. 30,000 people worked for the corporation, which was headquartered in Nashville, Tennessee.

Following the layoffs of hundreds of nonunion employees, the company gave legal notice for a bankruptcy filing and shut down operations in late July, according to the Teamsters, who represented Yellow’s 22,000 unionized workers.

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Bankruptcy on the Horizon Due to Debt and Challenges

In late July, The Wall Street Journal and FreightWaves both noted that the bankruptcy was imminent, pointing out that many customers had already begun to depart the carrier and that freight pickups had been halted.

Those reports came only days after Yellow successfully stopped the Teamsters from striking during contentious contract talks.

The Central States Health and Welfare Fund owes $50 million in total, but a pension fund agreed to extend health benefits for employees at two Yellow Corp. operational companies, preventing a walkout and giving Yellow “30 days to settle its obligations.”

The company announced that it has requested authorization from the U.S. Bankruptcy Court in Delaware to make payments, including those for employee wages and benefits, taxes, and a few key suppliers to its operations.

Throughout the years, Yellow has accumulated up considerable debt. Late in March, Yellow still owed over $1.5 billion in debt. Of that, the federal government owed $729.2 million.

The business received a $700 million pandemic-era loan from the Treasury Department in 2020 under the Trump administration on the basis of national security. The $700 million loan was initially endorsed by the Teamsters.

According to Yellow, as of June 30 the loan, which is due in 2024, had received $67 million in cash interest payments.

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Source: US News