(Reuters) -U.S. trucking firm Yellow Corp filed for Chapter 11 bankruptcy protection on Sunday and said it would wind down, after struggling with a mounting debt load and following tense contract negotiations with the Teamsters Union.
The nearly 100-year-old company’s bankruptcy filing puts about 30,000 workers at risk when the freight industry is already grappling with slumping volumes.
The company is a dominant player in the “less-than-truckload” segment that hauls cargo for multiple customers on a single truck.
Its clients include large retailers such as Walmart and Home Depot, manufacturers and Uber Freight. Some companies had paused shipments to Yellow on fears they could be lost or stranded if the trucking firm went bankrupt.
Prior to its demise, Yellow, one of the largest U.S. trucking companies, held roughly 8% to 10% of market share, per brokerage TD Cowen.
Yellow said on Sunday it intends to fully pay back a $700 million loan former President Donald Trump’s administration issued to bail out the long-troubled firm in 2020 under a pandemic relief program.
Yellow, formerly called YRC Worldwide, in a Delaware court estimated assets and liabilities of $1 billion to $10 billion, with more than 100,000 creditors.
The company has $1.3 billion in debt payments coming due in 2024, including a $567.4 million private-equity term loan in June and the U.S. loan in September.
Yellow also has a roughly $450 million secured revolving loan from a syndicate of banks arranged by Citizens Bank, Merrill Lynch and others that expires in January 2024.
“This leaves the taxpayer the last creditor to get repaid,” said the authors of a Congressional Oversight Commission report issued in June.
Yellow also gave the U.S. Treasury 15.9 million shares of its common stock as additional security for the loan, the authors said. The department held a 30.6% stake in Yellow, according to the trucking firm’s bankruptcy filing.
“It is with profound disappointment that Yellow announces that it is closing,” CEO Darren Hawkins said in a statement on Sunday.
Walmart will not see a hit from the bankruptcy as it has a diversified transportation network, a source familiar with the matter said last week.
UNDER STRAIN
The filing comes after the Teamsters said late last month that it was notified that the company was ceasing operations.
Yellow has been in contentious negotiations with the union over an internal restructuring initiative meant to boost efficiency. It recently averted a strike by 22,000 Teamsters-represented workers.
The company on Monday blamed the Teamsters for driving it into bankruptcy.
The union has previously said the company had mismanaged itself despite worker concessions and a federal bailout. A representative for the Teamsters was not immediately available for comment on Monday.
Yellow, saddled with liabilities from its purchases of Roadway in 2003 and USF in 2005, reported total debt of $1.5 billion last year, according to Refinitiv data.
Shares fell 34.4% to $2.34 in early trading on Monday. The shares soared five-fold last week following a surge in retail investors’ interest.
Meanwhile, some workers sued Yellow on Monday for failing to give the required 60 days notice before firing them.
(Reporting by Priyamvada C and Juby Babu in Bengaluru, Dietrich Knauth in New York, and Lisa Baertlein in Los Angeles, additional reporting by Siddharth Cavale and Jonathan Stempel in New York; Editing by Dhanya Ann Thoppil, Varun H K and Sriraj Kalluvila)
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