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Yellow Corp, an American haulage firm with nearly a century of history, filed for Chapter 11 bankruptcy protection this Sunday.
This action came as a result of considerable debt accrued following a sequence of mergers, and subsequent fraught contract discussions with the Teamsters Union.
The firm’s bankruptcy claim, filed in a Delaware court, cites predicted assets and liabilities ranging between $1 billion and $10 billion, with upwards of 100,000 creditors involved.
Yellow’s Chief Executive Officer, Darren Hawkins said, “It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business.”
Formerly identified as YRC Worldwide, Yellow stands as one of America’s largest haulage companies and is a leading entity in the “less-than-truckload” (LTL) sector, which provides the service of transporting cargo for numerous customers via a single lorry.
Their clientele encompasses major retailers such as Walmart and Home Depot, manufacturers, and Uber Freight. A few clients, however, have temporarily halted shipments due to concerns of potential loss or stranding should the transport provider declare bankruptcy.
Yellow’s bankruptcy application surfaced following the Teamsters’ announcement last month that they had been informed of the company’s decision to cease operations.
The company has been embroiled in contentious negotiations with the union regarding an in-house restructuring scheme intended to enhance efficiency. They recently staved off a strike by 22,000 workers represented by the Teamsters.
Before the strike threat was diffused, Yellow initiated a lawsuit against the union in a Kansas federal court, seeking to prevent the strike, claiming the union’s unwillingness to negotiate had brought the firm to the “brink of extinction.”
In June, Yellow announced that the Teamsters Union was obstructing restructuring and modernisation efforts, collectively dubbed as “One Yellow”, which the company deemed critical for its survival and capacity to refinance an approximate debt of $1.3 billion, due for repayment by 2024.
“Combined with months of refusals to negotiate, International Brotherhood of Teamsters (IBT) leaders’ campaign against Yellow caused grave concern among investors, drove away customers, and put 30,000 jobs at risk,” Yellow stated on Sunday.
Yellow, burdened by liabilities incurred from its acquisition of Roadway in 2003 and USF in 2005, declared a total debt of $1.5 billion last year, as per Refinitiv data.
American taxpayers could potentially suffer losses if the company fails to repay a $700 million loan issued by the administration of former President Donald Trump as a bailout for the long-ailing and poorly managed haulage company in 2020, as part of a pandemic relief programme.
