The final dominoes fell at Yellow on Sunday, as the debt-ridden freight trucking line filed for chapter 11 bankruptcy after weeks of trying to sell off assets to meet its financial obligations.
Yellow had released its employees and shut its doors on July 30 as the nation’s third-largest less than truckload (LTL) company ended its 99-year run amidst a pile of unpaid debts.
After spending cash to acquire several competing freight fleets in recent years, its first stumble came during the pandemic when the company failed to repay a $700 million federal loan. It then tripped again in July when it missed a contractually obligated, $50 million employees’ healthcare benefit payment. Yellow scrambled to raise quick funds by selling off its third party logistics (3PL) division, but ultimately succumbed to the combined pressures of a cyclical freight sector recession and a Teamsters union strike threat concerning the missing benefits.
Against that background, analysts have been forecasting the formal bankruptcy declaration for weeks. But the Teamsters Union today denounced the move as an “attempt by the company to evade its financial obligations through legal maneuvers.”
“Yellow may try to use the courts to eradicate its financial responsibilities, but they can’t escape the truth. Teamster families sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow. The company blew through a $700 million government bailout. But Yellow’s dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don’t,” Teamsters General President Sean M. O’Brien said in a release.
The Teamsters said its legal and economic teams are closely following Yellow’s moves throughout bankruptcy proceedings. The union—alongside industry group the American Trucking Associations (ATA)—is also working to find new jobs for the 30,000 former Yellow workers now unemployed, including drivers, dock workers, mechanics, salespeople, and administrative and support personnel.
However, Yellow’s leadership described the fall in different terms, blaming the Teamsters for blocking its “One Yellow” corporate realignment and modernization plan.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow CEO Darren Hawkins said in a release. “All workers and employers should take note of our experience with the International Brotherhood of Teamsters (IBT) and worry. We faced nine months of union intransigence, bullying, and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
Under terms of the bankruptcy, Yellow says it will now continue to manage the business through an “orderly wind-down” process including the marketing and sale of the Company and its subsidiaries.