Yellow Corporation, formerly known as YRC Worldwide, is facing bankruptcy and the closure of its operations, leaving thousands of employees without jobs. The company, which received a $700 million taxpayer bailout in July 2020, has been struggling with debt and declining freight shipments and rates.
The bailout, which was heavily criticized by the Congressional Oversight Commission, has now come under further scrutiny. A recent report by the Commission revealed the questionable actions taken by Yellow to secure the loan and how executives, directors, and the Teamsters union benefited from it.
Yellow spent a significant amount on lobbying efforts in 2020, compared to previous years, and the Commission noted the correlation between lobbying and the company’s ability to secure the loan. Several Senators and members of Congress also sent letters to the Treasury urging them to provide Yellow with the loan.
The report also revealed that Yellow and its lobbyists had contact with Defense Department officials involved in the process of certifying the company as “critical to maintaining national security.” They suggested that they had been in touch with White House officials and that Teamsters President Jimmy Hoffa had reached out to the Trump administration to advocate for the loan.
Despite concerns about Yellow’s billing practices and the availability of other trucking companies to replace its work with the federal government, the Treasury certified Yellow as critical to national security and finalized the loan.
The report further highlighted how Yellow’s executive officers, directors, and the Teamsters directly benefited from the bailout. They had significant stock holdings in the company, which they stood to lose in the event of bankruptcy. The rise in Yellow’s stock price after the loan also added to their financial gains.
Additionally, the loan enabled Yellow to pay off certain pension and healthcare obligations to the Teamsters, preventing the company from going bankrupt. Before obtaining the loan, Yellow had deferred millions of dollars in pension and healthcare payments for its unionized workforce.
The impending bankruptcy and closure of Yellow Corporation’s operations mark a significant setback for the company and its employees. The revelations about the bailout raise serious questions about the fairness and transparency of the process, as well as the accountability of those involved.
As the largest trucking company collapse in the US, the impact of Yellow’s bankruptcy will be felt throughout the industry. Other trucking companies are already scrambling to pick up the business, and Yellow’s customers are seeking alternative carriers for their freight shipments.
The future of Yellow Corporation remains uncertain, but it serves as a stark reminder of the risks associated with government bailouts and the need for greater oversight and accountability in such processes.Title: Yellow Corporation Faces Bankruptcy After Controversial Bailout
Subtitle: Executive officers, directors, and Teamsters benefit while taxpayers bear the brunt
Date: [Insert Date]
By Wolf Richter for WOLF STREET
Yellow Corporation, formerly known as YRC Worldwide, is on the brink of bankruptcy, just three years after receiving a $700 million taxpayer bailout. The company, which received widespread condemnation for the bailout, announced on Friday that it would be shutting down regular operations on July 28, 2023, leaving thousands of employees jobless.
The bailout, which was heavily criticized by the Congressional Oversight Commission, not only burdened US taxpayers with a $700 million debt but also granted them a 29.6% stake in Yellow Corporation. However, with the impending bankruptcy filing, these shares are expected to be wiped out, potentially leaving taxpayers with significant losses.
Sources have revealed that Yellow Corporation may file for bankruptcy as early as this week, marking the largest trucking company collapse in US history. The company’s customers have already started to abandon ship, seeking alternative carriers as freight shipments and rates decline from the pandemic-induced boom.
Yellow Corporation, which served major retailers such as Walmart and Amazon, operated over 12,000 trucks and employed nearly 30,000 individuals, including approximately 22,000 Teamsters members. The Teamsters union has warned its members to prepare for the worst, advising them to take their tools and personal belongings home to avoid being locked out when the bankruptcy filing occurs.
The company’s financial troubles can be traced back to its ill-fated expansion attempts through mergers and acquisitions, which left it burdened with a staggering $1.47 billion in long-term debt as of Q1. A significant portion of this debt, including the $700 million owed to the US government, is due in 2024.
Yellow Corporation’s struggle to stay afloat was further exacerbated by its failed attempts to implement operational changes to improve competitiveness. The Teamsters union blocked these changes, leading to a standoff that cost the company $137 million in lost earnings. The union’s refusal to cooperate also jeopardized Yellow Corporation’s ability to make pension-fund payments, prompting threats of a strike that further eroded customer confidence.
The Congressional Oversight Commission’s Special Report, released on June 27, 2023, shed light on the scandalous nature of the bailout. The report highlighted Yellow Corporation’s lobbying efforts to secure the loan and revealed how executives, directors, and the Teamsters directly benefited from the bailout.
Yellow Corporation’s executives and directors held substantial stock holdings, which they stood to lose in the event of bankruptcy. The bailout allowed them to avoid this loss and even profit from the subsequent rise in the company’s stock price. Additionally, the Teamsters benefited from the loan as it enabled Yellow Corporation to fulfill pension and healthcare obligations, preventing the company from going bankrupt.
The report also exposed the questionable tactics employed by Yellow Corporation to secure the bailout, including extensive lobbying efforts and close contact with government officials. The Treasury’s involvement in designating Yellow Corporation as critical to national security was also called into question.
As Yellow Corporation teeters on the edge of bankruptcy, the fallout from the controversial bailout continues to raise concerns about the misuse of taxpayer
How did Yellow Corporation’s lobbying efforts impact its ability to secure the taxpayer bailout loan?
Ugh acquisitions and heavy debt burdens. Yellow Corporation struggled to repay its debts and faced declining freight shipments and rates even before the pandemic hit. The COVID-19 crisis exacerbated these issues and pushed the company towards its current dire financial state.
The 2020 taxpayer bailout, which was aimed at preventing the company from bankruptcy and preserving jobs, has come under scrutiny due to questionable actions taken by Yellow Corporation to secure the loan. A recent report by the Congressional Oversight Commission uncovered the extent of lobbying efforts conducted by Yellow Corporation in 2020, in comparison to previous years.
The report highlighted the correlation between lobbying and the company’s ability to secure the loan, with multiple Senators and members of Congress advocating for the bailout. Yellow Corporation also had contact with Defense Department officials and suggested connections with the White House during the loan certification process.
Furthermore, the report revealed that Yellow Corporation’s executives, directors, and the Teamsters union directly benefited from the bailout. They had significant stock holdings in the company and experienced financial gains when the stock price rose after receiving the loan. The bailout also allowed Yellow Corporation to fulfill its pension and healthcare obligations to the Teamsters, preventing a potential bankruptcy.
The impending bankruptcy and closure of Yellow Corporation’s operations will have far-reaching consequences. It is the largest trucking company collapse in the US, and other trucking companies are already vying to pick up its business. Yellow Corporation’s customers are also seeking alternative carriers for their freight shipments, impacting the industry as a whole.
The revelations about the bailout raise serious concerns about the fairness and transparency of the process, as well as the accountability of those involved. The case of Yellow Corporation serves as a cautionary tale about the risks associated with government bailouts and the need for greater oversight and accountability in such situations.
