As the auctioning off of the majority of bankrupt LTL carrier Yellow’s terminal network unfolded last week, more drama as executives of the company reject a bid to revive the franchise, which filed for bankruptcy in July.
Supply Chain Digest Says...
|
 |
The investors hoping to revive Yellow say that “the market hasn’t recovered and the well-paying union jobs that Yellow truckers occupied have left a void in the economy,” according to CNBC.
|
 |
What do you say? |
| Click here to send us your comments |
 |
| |
|
According to a report on CNBC.com, a group of investors hoping to salvage shuttered trucking giant Yellow (formerly YRC Worldwide) were dealt a setback late last week when executives from the bankrupt company turned down a billion-dollar bid that would have scooped up much of what was left. But the group of investors led by trucking executive Sarah Riggs Amico, CEO of Jack Cooper Trucking, vowed to continue on, hoping that in the end the courts and the Treasury Department allow them to prevail.
One key issue is Amico’s demand that a $700 million from the US government as part of the COVID stimulus program be restructured. But the US Department of Treasury says their hands are tied in the matter.
“The loan in question was made during the prior Administration, and Treasury is one of several creditors taking part in the bankruptcy process. We will continue to work to ensure taxpayers, and impacted workers and their families are treated fairly.” Ashley Schapitl, Treasury Spokesperson, told CNBC.
CNBC also reports that Treasury officials maintain that the large loan cannot be modified because Yellow is in bankruptcy and that new Congressional authority would be needed to issue a new loan since the CARES Act authority has expired. Amico and her team are disputing Treasury’s legal opinion.
A bipartisan group of eight senators from both parties have publicly supported attempts to save Yellow and its 30,000 jobs, calling on Treasury to restructure the loan.
Interestingly, CNBC reports that after six months and a Chapter 11 filing, “it’s clear that there are many shades of Yellow. Some see the yellow of a fading sunset, while others see the bright yellow of a new beginning.”
When Yellow ceased operations, it had 12,000 trucks and 35,000 trailers idle, which could form the foundation for reviving the business. It also had an attractive network of 166 freight terminals, but 75% of those were acquired auction last week, for a total of $1.9 billion.
It’s hard to see how Yellow can be revived without its terminal network.
Last year, Yellow had revenue of $6 billion, making a top 5 US LTL carrier. But it was mired in debt and had poor relations with the Teamsters
Many predicted some chaos in the US freight market when Yellow suddenly went under, but that never materialized.
“There are a lot of implications to individuals, but to the industry and industry segment, I don’t see anything significant,” Michael Belzer, a professor of economics at Wayne State University, told CNBC.
(See More Below)
The investors hoping to revive Yellow say that “the market hasn’t recovered and the well-paying union jobs that Yellow truckers occupied have left a void in the economy,” according to CNBC.
The Yellow brand may be tarred, but the business isn’t, according to Amico.
“The business was fundamentally fixable and still is,” Amico said. She has been has been working with the Teamsters, who heavily criticized the Yellow bankruptcy and overall management, to get some sort of a deal approved.
CNBC notes that for Amico and her investors to succeed with their proposed billion-dollar rescue package, they must navigate a complex web of auctions, regulations, and garner court and government.
Add to that the loss of the Yellow terminal network, and the odds seem very remote at best.
Any thoughts on the drama at Yellow? Let us know your thoughts at the Feedback section below.
|
