99-Year-Old Trucking Company Yellow Files for Bankruptcy After $700M Federal Bailout
The bankruptcy will cost 30,000 people their jobs and might leave taxpayers on the hook.
Yellow Corporation, which operates one of the largest trucking companies in the United States, has filed for chapter 11 bankruptcy protection. The bankruptcy follows a $700 million government loan and puts roughly 30,000 people out of work.
Dating back 99 years, Yellow is one of the biggest players in the "less than truckload" freight industry, with an eight to 10 percent market share according to Reuters. It reached its current size following the financial crisis, acquiring other companies that The New York Times reports it integrated poorly, making the company less profitable than competitors. This spiraled into internal disinvestment, and in 2019, Yellow reportedly lost more than $100 million. (That year, the company also settled a lawsuit for defrauding the government over a seven-year period.)
The arrival of the COVID-19 pandemic in 2020 only worsened the company's prospects, but it received a $700 million lifeline from the federal government. The loan was criticized for propping up the investment of an equity firm reportedly tied to members of the Trump administration, which also saw the Treasury Department assume a 30.6 percent stake in the company as collateral. That loan, as well as others totaling $1.3 billion, come due in 2024.
Now, Yellow seeks bankruptcy protection, having reportedly told the Teamsters union that represents its workforce last week that operations will cease. Yellow's closure could put around 30,000 Americans out of a job.
"Families sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow. The company blew through a $700 million government bailout," said Teamsters general president Sean O'Brien. "But Yellow's dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don't."
Yellow, which the Teamsters described as "plagued with financial trouble for nearly two decades," sued the union for $137 million in June, and accused labor organizers of "driving our company out of business."
Layoffs reportedly began in late July, while Yellow maintains a non-union skeleton crew to liquidate its assets. The company claims an intent to pay its federal debt, though its private liabilities come due before its hefty federal loan does.
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