U.S. Trucking Firm Yellow Corp Files for Chapter 11 Bankruptcy, Leaving 30,000 Workers at Risk

On Sunday, U.S. trucking company Yellow Corp. filed for Chapter 11 bankruptcy protection and announced its intention to wind down operations. The 100-year-old firm, formerly known as YRC Worldwide, has struggled with a growing debt burden and faced tense contract negotiations with the Teamsters Union.

Yellow’s bankruptcy filing in a Delaware court reveals estimated assets and liabilities ranging from $1 billion to $10 billion, with over 100,000 creditors affected. The collapse of Yellow places about 30,000 workers in jeopardy, adding to the challenges faced by the freight industry, which is already grappling with a decline in shipment volumes.

In 2020, former President Donald Trump’s administration issued a $700 million loan to bail out the troubled firm under a pandemic relief program, which Yellow vowed to fully repay. However, the company has $1.3 billion in debt payments due in 2024, including a $567.4 million private-equity term loan in June and the U.S. loan in September.

Yellow Corp also holds a secured revolving loan of approximately $450 million from a bank syndicate, set to expire in January 2024. As the company winds down, the taxpayers are at risk of becoming the last creditors to be repaid, according to a Congressional Oversight Commission report.

Yellow’s closure affects one of the largest U.S. trucking companies, with a significant presence in the “less-than-truckload” segment that transports cargo for multiple customers on a single truck. Among its clients are major retailers like Walmart and Home Depot, manufacturers, and Uber Freight.

Walmart, however, does not foresee a significant impact from the bankruptcy as it operates a diversified transportation network. The filing comes after the Teamsters Union received notice last month that the company was ceasing operations.

Yellow has been engaged in contentious negotiations with the union over an internal restructuring initiative aimed at increasing efficiency. The firm recently averted a strike by 22,000 Teamsters-represented workers.

CEO Darren Hawkins expressed profound disappointment at Yellow corp’s closure, blaming the union for driving the company into bankruptcy. In contrast, the union has criticized Yellow for mismanagement despite worker concessions and a previous federal bailout. Teamsters representatives were not immediately available for comment.

The company’s shares fell 25% to $2.66 in premarket trading on Monday, following a recent surge in interest from retail investors that caused a five-fold increase in share value last week.

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