Yellow Corp., a prominent trucking company in the United States, has officially ceased operations in preparation for an imminent bankruptcy filing, as reported by the Wall Street Journal.
Expected Bankruptcy and Liquidation
After experiencing a significant decline in customers over the past few years, Yellow's announcement to shut down did not come as a surprise. Analysts have long anticipated a bankruptcy filing, with the subsequent liquidation becoming increasingly likely.
Impact on Employees and Teamsters
Yellow's collapse creates uncertainty for approximately 30,000 employees, including 20,000 members of the Teamsters. Non-union workers, on the other hand, were reportedly laid off on Friday.
Discord Between Yellow and Teamsters
Although Yellow and the Teamsters union were able to avoid a strike last week, tensions between the two parties have been ongoing. In particular, Yellow management accused the union of obstructing restructuring plans, which the union denied while attributing the company's struggles to poor management.
Government Loan and Debt
In an effort to navigate the challenges posed by the pandemic, Yellow received a $700 million loan from the government in 2020. However, documents indicate that the company has only repaid around $230 million thus far. Overall, Yellow is burdened with approximately $1.5 billion in debt.
Minimal Disruptions for Customers
Fortunately for Yellow's customers, the closure of the company is not expected to cause significant disruptions. Most customers have already transitioned their cargo shipments to alternative companies in recent weeks.
Yellow shares have experienced a substantial decline of 72% year-to-date and a staggering 85% over the past 12 months.