Creditors to Decide Fate of Bankrupt Trucking Firm as New Bidder Seeks to Save It

When Yellow went out of business abruptly in the summer and filed for bankruptcy protection, it seemed unlikely that a buyer would emerge to try and revive the struggling trucking company.

However, a prominent trucking executive has put together a last-minute plan to acquire Yellow out of bankruptcy. This proposal aims to rehire many of the company’s employees and work with their union, the International Brotherhood of Teamsters, with the goal of creating a sustainable business.

The plan hinges on persuading the Treasury Department to allow Yellow to delay repayment of a $700 million rescue loan that it received in 2020. This may prove challenging as there are legal barriers to extending the loan, and it would be repaid sooner under the plan that Yellow has already filed in the Delaware bankruptcy court, which involves selling the company’s terminals and other assets to raise cash. Some trucking analysts believe that reviving Yellow will be difficult as many customers have already switched to other, better-managed trucking companies.

But Sarah Riggs Amico, the trucking executive leading the deal, is confident that her plan is the only one that could bring back thousands of jobs. She claims to have the experience to build a more efficient company in collaboration with the Teamsters and to assemble an executive team capable of winning back customers.

Under the proposal, Ms. Riggs Amico’s group would extend the Treasury loan so that it would be repaid in 2026 instead of next year. The group would also borrow $1.1 billion to pay off other secured creditors and bankruptcy lenders and provide the new company with operating cash. Additionally, it would issue $1.5 billion of preferred shares to unsecured creditors, with the Central States Pension Fund being the largest beneficiary. Ms. Riggs Amico’s bid is set to be submitted to the bankruptcy court on Tuesday, coinciding with an auction to sell Yellow’s assets.

Furthermore, Ms. Riggs Amico and other female executives would own 51 percent of the new company, which would be separate from Jack Cooper. The new Yellow plans to employ around 15,000 people, down from the 30,000 it employed earlier this year.

The Teamsters have expressed support for the plan, with a spokeswoman stating that they have a framework agreement to establish good union jobs, fair wages, and strong benefits once the new company is in place.

Government labor market data indicate that approximately 10,000 former Yellow employees have found employment elsewhere. This suggests that about 20,000 former Yellow employees are still seeking work.

While the idea of bringing back lost trucking jobs and reviving a unionized company may seem appealing to the labor-friendly Biden administration, the Treasury may not have the legal authority to extend the loan, which was issued under the CARES Act. Additionally, there may be concerns about further supporting a company that has struggled for years.

In response to inquiries about the situation, a Treasury spokesperson stated that the department is participating in the bankruptcy process and is committed to ensuring fair treatment for taxpayers, affected workers, and their families.

Thomas Nyhan, the executive director of the Central States Pension Fund, mentioned that the fund is assessing the financial implications of each proposal as the terms of the rescue bid evolve. He also highlighted a potential legal obstacle related to the pension fund’s ownership of securities issued by companies contributing to the fund under the proposed plan.

Members of Congress from both parties have urged the Treasury to consider extending its loan. Senators Josh Hawley and Elizabeth Warren have written to the Treasury, advocating for assistance in the sale of Yellow to an acquirer to preserve jobs.

Yellow’s loan from the Treasury, designated to help crucial national security companies, has sparked scrutiny due to its connection to the Trump administration and a lawsuit by the Justice Department over alleged overcharging of the Department of Defense for freight services. Despite these challenges, the prospect of reviving Yellow continues to generate interest.

Experts attribute Yellow’s underperformance to its failure to effectively integrate major acquisitions and higher costs, partly linked to the unionization of its workforce.

Ms. Riggs Amico, a Democratic primary candidate in Georgia for the U.S. Senate in 2020, has prior experience in restructuring Teamster trucking companies. Some of Yellow’s competitors have expressed interest in acquiring its terminals under the current plan in Delaware bankruptcy court, while Estes Express has submitted a bid for Yellow’s shipment centers.

It is uncertain whether there would be much room left for a resurrected Yellow. Trucking experts suggest that the market is gradually adjusting to the absence of the company and anticipate the sector to recover in the near future.