Reviving Yellow: A Bid to Resurrect the Fallen Trucking Giant

The bankruptcy of Yellow, a significant player in the trucking industry, has sparked a complex situation involving various stakeholders, including competing trucking companies, government entities, and thousands of former employees. The company, previously a dominant force in the less-than-truckload sector, faced a downfall during the summer, leading to a significant loss of jobs and financial obligations.

Sarah Riggs Amico, the executive chair of Jack Cooper Transport, is spearheading a bid to resurrect Yellow as a smaller, more efficient trucking company. This move is aimed at recapturing a portion of the substantial freight business Yellow lost to competitors. The bid includes a proposal to extend a $700 million loan granted to Yellow during the Covid-19 pandemic under the Cares Act. This loan, currently due in 2024, is a critical aspect of the financial restructuring.

Yellow’s collapse left a debt of about $1.3 billion, impacting various creditors, including the federal government, and led to the loss of approximately 30,000 jobs, significantly affecting members of the Teamsters union. The International Brotherhood of Teamsters has shown support for Amico’s bid, which suggests a potential path to recovery for many affected workers. Amico’s proposal, submitted recently, involves $1.1 billion in financing. This sum would be allocated to repay lenders, settle bankruptcy-related costs, and fund the new venture. A key part of this plan is the extension of the pandemic loan’s repayment period to 2026, a request currently under consideration by the Treasury Department.

However, the chances of this extension appear doubtful, as Treasury officials have indicated the need for congressional authority to modify the loan due to Yellow’s bankruptcy status and the expiration of the Cares Act authority. In addition to addressing secured debts, the new bid proposes offering unsecured creditors, including pension funds, $1.5 billion in perpetual preferred shares in the new company, with a 7% dividend rate. This aspect is particularly notable for the Central States, Southeast and Southwest Areas Pension Fund, Yellow’s largest unsecured creditor, which claims it is owed nearly $5 billion due to Yellow’s premature withdrawal from the fund.

The current scenario also involves the auction of Yellow’s assets, including trucks, trailers, and about 170 North American truck terminals, collectively valued at over $2 billion. Estes Express Lines, another major trucking company, has already placed a leading bid of $1.525 billion for Yellow’s real estate holdings. This auction, which is expected to last several days, could see Yellow’s assets divided among multiple buyers if individual offers surpass Estes’ bid. Interestingly, Old Dominion Freight Line, a key competitor, has withdrawn from the bidding process, with its CEO Marty Freeman expressing a strategy of potential post-auction negotiations.

In summary, Yellow’s bankruptcy has set off a chain of events involving high-stakes financial negotiations, potential industry restructuring, and significant implications for former employees and creditors. The outcome of these proceedings will likely have a lasting impact on the trucking industry’s landscape.