Rescuing Yellow Corp: In a relatively under-the-radar move, one of the United States’ prominent privately-owned auto transport companies, Jack Cooper Transport, is gearing up for an audacious attempt to pull trucking giant Yellow Corp back from the brink of bankruptcy. This could potentially safeguard around 30,000 union jobs that hang in the balance.
The International Brotherhood of Teamsters and a group of U.S. senators are increasing the heat on the Biden administration to throw its weight behind this endeavor. Yellow Corp filed for bankruptcy protection back in August, and the impending liquidation of its assets is looming on the horizon.
The Jack Cooper bid’s success largely rests on a crucial factor: whether the Treasury Department decides to extend the maturity date for the COVID pandemic loans that the Trump administration granted to Yellow Corp back in 2020. Extending the loan terms to 2026 would enable Jack Cooper to offer more favorable terms to Yellow Corp, as they wouldn’t be required to pay back the loan immediately.
Recent discussions between Jack Cooper officials, including Executive Chair Sarah Amico, and the Biden administration have been heating up, particularly with the involvement of the Teamsters. These conversations have been on the rise over the past few weeks, indicating a growing sense of urgency.
The Biden administration, led by Lael Brainard, head of the White House National Economic Council, and Brendan Danaher, the White House’s top labor adviser, has been kept in the loop on this potential Jack Cooper bid. Stakeholders have been actively briefing the White House on these efforts.
Also Read: Yellow Corp Bankruptcy Saga Unfolds Apollos Bid Rejected, Competing Offers Emerge
The White House has been redirecting inquiries from Jack Cooper stakeholders to the Treasury Department, which may indicate ongoing discussions. Treasury, however, has not officially commented on the matter.
“It is unfortunately necessary for Treasury to take these steps to save tens of thousands of union jobs that have already experienced hardship due to Yellows years of mismanagement,” Democratic U.S. senators, including Bob Casey from Pennsylvania and Tammy Baldwin of Wisconsin, emphasized in separate letters to the Treasury Department.
These senators are pushing for an extension of the maturity date of the $700 million in COVID pandemic loans that were extended to Yellow Corp in 2020. They are proposing that, in exchange for the government extending the loan terms to 2026, they take a stake of nearly 30% in the company.
Currently, these loans are set to mature in September 2024, which puts considerable pressure on Jack Cooper’s bid. Extending the payback period would significantly bolster their ability to offer more attractive terms to Yellow Corp.
Yellow Corp owns approximately 12,000 trucks, 35,000 trailers, and hundreds of terminals, as per its bankruptcy court filing. They intend to sell these truck and terminal assets separately, which could complicate efforts to acquire the entire company.
The Biden administration has been highly supportive of America’s union workforce and has been actively working to counter rising transportation costs, making any deal that preserves jobs politically appealing.
Yellow Corp, formerly known as YRC, is a significant player in the less-than-truckload carrier industry in the United States, with clients like Walmart and Home Depot. The company’s bankruptcy filing could potentially saddle U.S. taxpayers with losses stemming from a government rescue of the troubled carrier.
Yellow Corp cited a labor dispute with the Teamsters union as the reason for its collapse, ultimately resulting in the termination of around 22,000 union-represented drivers during its bankruptcy. The Teamsters, on the other hand, have pointed fingers at the company’s mismanagement as the root cause of its financial woes.
In the midst of these developments, trucking firm Estes Express submitted a revised bid of $1.525 billion in cash for Yellow Corp’s shipment centers, surpassing the $1.5 billion bid from Old Dominion Freight Line.
This unfolding drama represents a high-stakes rescue mission that carries significant implications for a multitude of stakeholders, not to mention thousands of workers and their families. The coming months will be crucial in determining Yellow Corp’s fate and the future of these union jobs.
Our Reader’s Queries
Who bought Yellow Freight 2023?
XPO emerged victorious in a court-supervised auction that involved around 20 companies, including Estes Express Lines and Knight-Swift Transportation Holdings (KNX. N). The auction resulted in the sale of Yellow’s assets for $1.88 billion, according to a court filing on Monday.
What’s going on with Yellow Freight company?
In August, Yellow filed for bankruptcy protection. The company’s extensive trucking and terminal assets may soon be liquidated, with estimates valuing its real estate at $1.5 billion and its vehicle fleet at hundreds of millions of dollars. This process is expected to begin next month.
Did Yellow Freight employees lose their pension?
Yellow’s participation in the Central States Pension Fund has been terminated since July 23, 2023. This means that active members are no longer earning additional pension benefit accruals. Unfortunately, there is no self-payment option available to maintain future pension coverage.
Why is Yellow Trucking closing?
Yellow is closing down due to its inability to reorganize and refinance its outstanding debt of approximately $1.5 billion, which included a significant amount from a $700 million government loan during the pandemic. Despite efforts to turn things around, the company was unable to secure the necessary funding, leading to its unfortunate shutdown.