BNR – In a significant turn of events, Yellow Corp, a nearly century-old American trucking conglomerate, has officially filed for Chapter 11 bankruptcy protection, citing substantial financial pressures stemming from a series of mergers and intense contract negotiations with the Teamsters Union. This bold move occurred on Sunday, with an official statement from Yellow’s CEO, Darren Hawkins.

The Chapter 11 bankruptcy petition, presented in a Delaware court, delineates Yellow Corp’s estimated assets and liabilities, falling within the range of $1bln to $10bln, and involving over 100,000 creditors who are intertwined with the company’s operations.

Sombre Declaration of Chapter 11 Bankruptcy

CEO Darren Hawkins shared, “It is with profound regret that Yellow Corp announces its impending closure, marking the end of a nearly century-long journey in the business realm.”

Formerly known as YRC Worldwide, Yellow Corp commands a significant position as one of the largest trucking entities in the United States, with a particular stronghold in the “less-than-truckload” (LTL) sector. This domain revolves around the transportation of cargo for numerous clients on a single truck, with prominent customers such as retail giants Walmart and Home Depot, manufacturers, and even Uber Freight.

However, apprehensions emerged among some clients as they temporarily halted their shipments to Yellow Corp out of concerns that their goods might be subject to compromisation if the company indeed succumbed to bankruptcy.

The impetus for Yellow Corp’s Chapter 11 filing materialised after a dispute with the Teamsters Union, with the company contending with the ramifications of an intricate internal restructuring effort aimed at bolstering operational efficiency. This contentious scenario was temporarily subject to defusing when 22,000 Teamsters-represented workers narrowly averted a strike.

Before the resolution of this potential strike, Yellow Corp took legal action against the union in a Kansas federal court, seeking an injunction against the impending strike. The company’s argument asserted that the union’s reluctance to engage in negotiation had pushed Yellow Corp to the precipice of insolvency.

In a critical juncture back in June, Yellow Corp disclosed that the Teamsters Union was impeding crucial restructuring and modernisation endeavours, collectively known as “One Yellow.”

Yellow Corp: Implications for US Trucking Industry, Taxpayers Await

Yellow Corp emphasised the implications of the union’s actions on multiple fronts, stating, “Coupled with months of negotiation refusals, the International Brotherhood of Teamsters (IBT) leadership campaign against Yellow Corp elicited deep concerns among investors, alienated customers, and endangered the livelihood of 30,000 employees.”

The tumultuous journey of Yellow Corp, underscored by its acquisitions of Roadway in 2003 and USF in 2005, resulted in mounting liabilities. Last year, the company reported a substantial total debt of $1.5bln, as reported by Refinitiv data.

Further complicating the situation, potential ramifications extend to US taxpayers, as the company remains obligated to repay a $700mln loan issued by the administration of former President Donald Trump as part of a pandemic relief programme aimed at salvaging the ailing and poorly managed trucking firm.

The coming weeks and months will undoubtedly see the unfolding of Yellow Corp’s complex bankruptcy proceedings, a pivotal juncture that holds implications not only for the company but also for the broader landscape of the US trucking industry.