US trucking firm Yellow files for bankruptcy after loading up on debt

[August 07, 2023]  (Reuters) - Yellow Corp, a nearly 100-year-old U.S. trucking firm, filed for Chapter 11 bankruptcy protection on Sunday, burdened with a heavy debt load after a series of mergers, and following tense contract negotiations with the Teamsters Union.

The bankruptcy filing in a Delaware court lists estimated assets and liabilities of $1 billion to $10 billion, with more than 100,000 creditors.

"It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business," Yellow's CEO, Darren Hawkins, said in a statement on Sunday.

Yellow, formerly called YRC Worldwide, is one of the largest U.S. trucking companies and a dominant player in the "less-than-truckload" (LTL) segment that hauls cargo for multiple customers on a single truck.

Its customers include large retailers such as Walmart and Home Depot, manufacturers and Uber Freight.

Some, however, have paused shipments to the company on fears they could be lost or stranded if the carrier went bankrupt.

Yellow's bankruptcy filing comes after Teamsters said late last month that it was notified that the company was ceasing operations.

The company 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.

Before resolving the strike threat, Yellow sued the union in Kansas federal court, seeking to block a strike and saying that union's refusal to negotiate had pushed the company to the "brink of extinction."

Freight trucks are driven on the Fisher freeway in Detroit, Michigan March 27, 2009. REUTERS/Rebecca Cook/File Photo

In June, the company said that the Teamsters Union was blocking restructuring and modernization efforts, collectively known as "One Yellow", which it said were critical for Yellow's survival and ability to refinance about $1.3 billion of debt due to be repaid by 2024.

"Combined with months of refusals to negotiate, International Brotherhood of Teamsters (IBT) leaders' campaign against Yellow caused grave concern among investors, drove away customers, and put 30,000 jobs at risk," Yellow said on Sunday.

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.

U.S. taxpayers face potential losses if the company does not repay a $700 million-loan the administration of former President Donald Trump issued to bail out the long-troubled and poorly managed trucking firm in 2020 under a pandemic relief program.

(Reporting by Dietrich Knauth in New York, Priyamvada C and Juby Babu in Bengaluru, Siddharth Cavale in New York and Lisa Baertlein in Los Angeles; Editing by Sriraj Kalluvila, Dhanya Ann Thoppil and Varun H K)

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