Trucker Yellow goes bankrupt after debt, labor woes pile up

Yellow filed for bankruptcy and will remain shuttered – throwing 30,000 people out of work – after the trucking firm’s long-running financial woes were compounded by a dispute with the Teamsters union.

The carrier will sell its warehouses and trucks to repay a pandemic-era, government loan of $737 million and another $485 million in debt it owes private lenders, according to court papers filed Monday in bankruptcy court in Wilmington, Del.

The Chapter 11 petition gives Yellow breathing room from creditors as it winds down and solicits bids on its assets.

The company’s shares are already reversing some of last week’s gains, plunging 30% to $2.48 in trading Monday.

“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow Chief Executive Officer Darren Hawkins said in a statement.

“For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

The shutdown will leave Yellow’s roughly 30,000 employees jobless, according to a statement.

The company has already fired at least 3,500 people, court papers show.

Yellow and the American Trucking Associations are launching a jobs database to help employees find work, the company said.

The company also expects to obtain some fresh cash to fund its wind-down and pay certain wages accrued before the bankruptcy.

Yellow will keep about 1,650 workers to help it shut down and sell its assets, the company said.

The Nashville-based Yellow blamed its collapse on union officials, claiming that the International Brotherhood of Teamsters, one of the most powerful labor groups in the U.S., refused to help management revitalize the long-struggling business.

It had previously traded barbs with Teamsters, saying the union had gummed up plans to reshape its trucking divisions.

During the pandemic, Yellow received a $737 million loan from the Trump administration to keep the company afloat.

The debt made up 95% of what was dispersed under a Cares Act program to offset losses for businesses critical to national security, but congressional investigators last year concluded the company was ineligible for the loan.

Yellow claims that it may be able to fully repay that taxpayer loan and its other secured debt if it gets enough cash from selling its assets.

To fund its wind down, the company plans to borrow as much as $142.5 million and to refinance another $501 million in older debt, according to court papers.

That money is being provided by Yellow’s current lenders, who were the only investors willing to give the company more money.

Investing giant Apollo Global Management is among the company’s biggest private lenders and was involved in putting together the new loan package, court documents show.

Earlier, the company had notified union officials that it planned to file for bankruptcy after ceasing operations, according to a statement from the Teamsters.

Trucking firms and other companies across the shipping industry have been burdened by a slowdown in freight demand coming out of the pandemic.

Yellow is the third-largest less-than-truckload carrier, meaning it accepts shipments that don’t fill a whole trailer.

The company has been struggling financially as it stares down more than $1 billion of debt that matures in 2024.

Bankruptcies tend to bite less-than-truckload carriers hard because shippers often divert their loads to competitors, weakening already-struggling companies in a manner similar to bank runs, Bloomberg Intelligence’s Lee Klaskow said in a July 27 note.

Yellow has faced years of financial stress.

The company staved off a bankruptcy filing in 2009 after bondholders agreed to swap debt for equity, only to have to restructure again in 2011.