U.S. trucking giant Yellow Corp. has announced that it has declared bankruptcy following a tense standoff with the Teamsters Union and after a massive pandemic-era federal loan failed to stave off the company’s mounting debt.
Announced Sunday, the move was long foreshadowed after Yellow Corp. halted its operations late last month and news of layoffs of nonunion employees had begun to spread. The Teamsters Union, which had been engaged in contract negations on behalf of the roughly 22,000 unionized Yellow employees it represents, previously said that it had received legal notice on July 31 of the impending bankruptcy filing.
The summer of strikes? Here’s what the data says.
The freight company based in Nashville, Tennessee, which employs about 30,000 workers, said in a news release on Sunday that it was seeking bankruptcy protection so it can wind down its business in an “orderly” way. The Chapter 11 petition was filed in federal bankruptcy court in Delaware.
While a Chapter 11 filing is used to restructure debt while operations continue, Yellow will liquidate and the U.S. will join other creditors unlikely to recover funds extended to the company, according to the Associated Press.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” the company’s CEO Darren Hawkins said in a statement. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
USA TODAY could not immediately reach a representative from Yellow Corp. for comment.
Yellow blames union tactics for financial woes
A dominant player in the supply chain industry, Yellow became the third-largest small-freight-trucking company in the U.S. with clients that included both big box retailers and small family businesses.
But the company had an outstanding debt of about $1.5 billion as of March and has continued to lose customers as its demise appeared imminent.
That includes what it owes to the federal government in order to pay back a $700 million loan it received in 2020 when it was known as YRC Worldwide. The loan issued by former President Donald Trump’s administration was part of a relief program as the COVID-19 pandemic crippled the U.S. economy and many businesses along with it.
A congressional probe recently concluded that the Treasury and Defense departments “made missteps” in the decision and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”
Yellow said on Sunday it intends to fully pay back the loan.
Yet as the financial woes mounted, Yellow also found itself in a protracted series of intense negotiations with the Teamsters over wages and benefits for its unionized employees.
Teamsters General President Sean M. O’Brien has long accused Yellow of mismanagement. Last month, O’Brien said the company “has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government.”
However, in announcing its bankruptcy filing, Yellow also blamed the Teamsters for causing “irreparable harm” to its efforts modernize its business in order to compete with non-union carriers that “increasingly dominated the industry.”
“We faced nine months of union intransigence, bullying and deliberately destructive tactics,” Hawkins said in the statement. “A company has the right to manage its own operations, but as we have experienced, (Teamsters) leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
Yellow sued the Teamsters in June, claiming it had caused more than $137 million in damages for “unjustifiably blocking” restructuring plans needed for the company’s survival — litigation the union called “baseless.”
In a statement Monday, the Teamsters, which said it agreed in 2011 to a pay cut for employees to keep the company in business, denounced “any attempt by the company to evade its financial obligations through legal maneuvers.”
“Teamster families sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow … But Yellow’s dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don’t,” O’Brien said in a statement. “They shamelessly pin their corporate incompetence on working people.”
Christmas Tree Shops: Christmas Tree Shops announces ‘last day’ sale; closing remaining locations in 16 states
Job database to help Yellow employees find work
Yellow also announced that it has partnered with the American Trucking Associations to launch a searchable job database for Yellow employees to find work in the freighting industry.
The Teamsters has also previously said that it would shift focus to help its members find “good union jobs in freight and other industries.”
Contributing: The Associated Press
Eric Lagatta covers breaking and trending news for USA TODAY. Reach him at elagatta@gannett.com.
