Yellow Corp's Unsuccessful Financial Restructuring
The Teamsters Union reported on Sunday that Yellow Corp, a financially struggling trucking company based in the United States, has discontinued its operations and is filing for bankruptcy. This comes as a result of the company's unsuccessful efforts to restructure and refinance its billion-dollar debt.
No Response from Yellow Corp
Following the announcement, Yellow Corp, previously known as YRC Worldwide (NASDAQ: YELL), has not yet responded to a comment request made by Reuters.
Exploration of Divestment and Strike Aversion
Earlier in the month, Yellow Corp averted a potential strike by 22,000 workers represented by the Teamsters and announced last week that it was considering the possibility of divesting its third-party logistics company.
Teamsters Criticize Yellow Corp's Management
The Teamsters Union's General President, Sean M O'Brien, criticized Yellow's management in a statement. According to him, despite receiving billions in worker concessions and hundreds of millions in federal bailout funding, Yellow Corp failed to manage itself effectively.
Impacts on Key Customers
Yellow Corp, the third-largest U.S. trucking company specializing in the less-than-truckload segment, had major retailers like Walmart (NYSE: WMT) and Home Depot (NYSE: HD), manufacturers, and Uber (NYSE: UBER) Freight among its customers. However, some of these customers stopped cargo shipments to the company due to fears that their goods could get lost or stranded in the event of Yellow's bankruptcy.
Union Allegedly Blocking Restructuring Efforts
Yellow Corp had stated in June that the Teamsters Union was obstructing restructuring and modernization efforts, collectively known as "One Yellow". These efforts were deemed crucial for Yellow's survival and the refinancing of its roughly $1.3 billion debt, which was expected to be repaid by 2024.
Relief Loan from the U.S. Government
Part of Yellow's debt includes a $700 million pandemic relief loan given by the Donald Trump-led U.S. government in 2020 in exchange for a 30% stake in the Nashville, Tennessee-based company.
Job Losses and Report of Closure
Earlier on Sunday, the Wall Street Journal cited notices sent to customers and employees in a report about the cessation of Yellow's operations. The WSJ also reported on Friday that the trucking company had laid off a significant number of non-union workers.