The trucking industry's famed company, Yellow Corp, files for a Chapter 11 bankruptcy. On August 7th they announced their official filing for bankruptcy after laying off 30,000 of their employees. They will be entering into an agreement that will allow the century-old company to close their company down officially. They will go into a “debtor-in-possession” agreement which will give them all needed liquidity to cover any expenses whilst they are in the selling period. Yellow Corp specifically asked if the money can be used to pay for employee wages and benefits, taxes, and more business required behind payments.
Yellow Corp currently has a $1.5 billion debt.
Of the $1.5 billion debt that the company is under, over $700 million of it is owed to the United States government. Per the agreement Yellow made for the bankruptcy claim, 30% of the company’s stock is now owned by taxpayers. This is not worth much; however, since the company’s value severely declined once they began having financial struggles.
With Yellow Corp closing their doors, they leave behind nearly 300 facilities, 12,500 trucks, 42,000 trailers, and 30,000 employees. Of the 30,000 employees, about 22,000 were represented by the Teamsters Union. The CEO of Yellow Corp, Darren Hawkins, spoke out against the Teamsters Union, ultimately placing most blame on them for the company’s closure. Hawkins expressed that Yellow Corp “faced nine months of union intransigence, bullying, and deliberately destructive tactics.” He complained about the involvement the union had in day-to-day operations, saying that drove them out of business.
Hawkins spoke in this way about the Teamsters as a way to heed a warning to other companies that work with the union.
Oppositely, the president of the Teamsters Union made a statement saying that Teamsters members ultimately “sacrificed billions of dollars in wages, benefits, and retirement security to rescue Yellow.” He speaks in a way pointing all blame to Yellow themselves and uses this event as a way to promote the importance of unionization.
The truth of the matter is that Yellow Corp has been struggling for quite some time now. In the early 2000s, they made some expensive decisions that were meant to broaden their horizons, but rather it just pushed them into deeper debt. Since the company has been trying to stay afloat, going back and forth between debt and extreme debt. In 2009, they released records showing they had accumulated $2 billion in losses over five fiscal quarters. Employees of the company have said they have seen the writing on the wall for a while now, but the official news of lay-offs and bankruptcy still came as a surprise.
