Freight trucks are driven on the Fisher freeway in Detroit, Michigan March 27, 2009. REUTERS/Rebecca Cook/File Photo
Aug 7 (Reuters) – U.S. trucking firm Yellow Corp (YELL.O) filed for Chapter 11 bankruptcy protection on Sunday and said it would wind down, after struggling with a mounting debt load and following tense contract negotiations with the Teamsters Union.
The nearly 100-year-old company’s bankruptcy filing in a Delaware court estimated assets and liabilities of $1 billion to $10 billion, with more than 100,000 creditors.
The collapse of Yellow, formerly called YRC Worldwide, puts about 30,000 workers at risk when the freight industry is already grappling with a slump in volumes.
Yellow said on Sunday it intends to fully pay back a $700 million loan former President Donald Trump’s administration issued to bail out the long-troubled firm in 2020 under a pandemic relief program.
The company has $1.3 billion in debt payments coming due in 2024, including a $567.4 million private-equity term loan in June and the U.S. loan in September.
Yellow also has a roughly $450 million secured revolving loan from a syndicate of banks arranged by Citizens Bank NA, Merrill Lynch and others that expires in January 2024.
“This leaves the taxpayer the last creditor to get repaid,” said the authors of a Congressional Oversight Commission report issued in June.
Yellow also gave Treasury 15.9 million shares of its common stock as additional security for the loan, the authors said.
“It is with profound disappointment that Yellow announces that it is closing,” CEO Darren Hawkins said in a statement on Sunday.
Yellow is one of the largest U.S. trucking companies and a dominant player in the “less-than-truckload” segment that hauls cargo for multiple customers on a single truck.
Its customers include large retailers such as Walmart (WMT.N) and Home Depot (HD.N), manufacturers and Uber Freight. Some, however, have paused shipments to Yellow on fears they could be lost or stranded if the carrier went bankrupt.
Walmart does not see a hit from the bankruptcy as it has a diversified transportation network, a source familiar with the matter said last week.
UNDER STRAIN
The filing comes after Teamsters said late last month that it was notified that the company was ceasing operations.
Yellow has been in contentious negotiations with the union over an internal restructuring initiative meant to boost efficiency. It recently averted a strike by 22,000 Teamsters-represented workers.
The company on Monday blamed Teamsters for driving it into bankruptcy.
The union has previously said the company had mismanaged itself despite worker concessions and a federal bailout. Teamsters representatives were not immediately available for comment on Monday.
Yellow, saddled with liabilities from its purchases of Roadway in 2003 and USF in 2005, reported total debt of $1.5 billion last year, according to Refinitiv data.
The company’s shares fell 25% to $2.66 in premarket trading on Monday. The shares soared five-fold last week following a surge in retail investors’ interest.
Reporting by Priyamvada C and Juby Babu in Bengaluru, Dietrich Knauth in New York, and Lisa Baertlein in Los Angeles, additional reporting by Siddharth Cavale in New York; Editing by Dhanya Ann Thoppil, Varun H K and Sriraj Kalluvila
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