Yellow, the troubled trucking firm that got a $700 million federal emergency loan, informed employees on Friday that it is be closing all of its sites and laying off all of its workers.
This is done in preparation for Yellow’s anticipated bankruptcy filing in the near future. If the corporation were to shut down, it would put an estimated 30,000 people out of work and bring an end to an industry that was so vital to the United States’ supply lines that it required a government bailout only three years ago.
In order to go ahead with a reorganisation plan, Yellow has engaged in prolonged labour discussions with the International Brotherhood of Teamsters over a new contract.
Yellow had $1.5 billion in debt as of the end of March, with over $730 million due to the federal government alone. About $66,000,000 has been spent on interest alone, yet just $230,000 has been put towards paying down the loan’s principle.
Since Yellow is one of the most important goods transportation businesses in the United States, its demise might affect the whole supply chain. United Parcel Service is filing for bankruptcy only days after company and the union representing its more than 325,000 U.S. employees struck a deal to prevent a strike.
There has been no pay and benefit agreement reached between Yellow’s management and union negotiators.
The future of Yellow’s property is uncertain. The Trump administration, which has connections to the corporation and its management, promised to provide the company with a pandemic relief loan and assume a 30% ownership position in the company in 2020.
Yellow said a month ago that it had contacted the Biden administration to help negotiate an agreement with the union. This week, the White House has been silent on the matter.
On Thursday, a business representative said Yellow was making plans for “a range of contingencies” as negotiations with the union continued. A corporate representative would not discuss the future of the company on Friday.
The Teamsters sent a dire warning to local unions on Friday, saying that the future of Yellow was “increasingly bleak.”
This week, as the likelihood of Yellow filing for bankruptcy increased, shippers began shifting freight away from its network, and Yellow’s stock price plummeted.
Stephens analysts speculated that the corporation may be spending up to $10 million in cash per day. Analysts warned clients in a letter that the trucking company was “mortally wounded” due to lost revenue and the potential of a strike, and that it may have reached “the end of the road.”
Yellow, formerly known as YRC Worldwide, has been experiencing mounting financial difficulties for quite some time.
The trucking firm will be able to remain viable thanks to a $700 million loan from the Treasury Department that was disclosed in July of 2020. The company was having financial difficulties and was being sued by the Department of Justice on allegations that it had misled the federal government over a seven-year period, so the loan naturally aroused eyebrows. The lawsuits were settled for $6.85 million, which the corporation agreed to pay.