Trucking enterprise Yellow has filed for Chapter 11 bankruptcy, signaling the end of the road for the 99-year-old company due to clashes with unions and mounting debt. The company’s closure comes after it received a $700 million pandemic loan from the Trump administration, which attracted scrutiny. CEO Darren Hawkins expressed deep disappointment at the company’s closure. Yellow, which specializes in transporting smaller loads, suffered significant losses as it faced off against the International Brotherhood of Teamsters in their efforts to restructure the company and refinance $1.3 billion in debt. The company’s secured creditors include Apollo Global Management and the Treasury Department, which provided the $700 million loan. Unsecured creditors listed in the bankruptcy filing include BNSF Railway, Amazon, and Home Depot. Experts are unsure how much the government will recover, given the company’s growing debt. The Treasury Department’s 30% equity stake received in exchange for the loan is likely worthless, according to bankruptcy experts. Congress released a report in June highlighting missteps in the loan’s certification process and the potential for losses to taxpayers. While Yellow has made interest payments, it has made little progress towards reducing the principal amount. Yellow expects to receive funding through a debtor-in-possession agreement to finalize operations and sell off assets. Analysts suggest that Yellow’s real estate holdings may provide value to meet its obligations. The company’s troubles stem from previous acquisitions that were not properly integrated, leading to inefficiencies and financial struggles. These struggles resulted in tensions with the union over wages and benefits, eventually leading to the company’s demise. Yellow’s absence will disrupt the less-than-truckload market, potentially resulting in higher shipping prices, but it is not expected to cause supply chain disruptions like those seen during the pandemic. The closure will greatly impact displaced workers, who will face challenges finding new jobs amidst a freight recession and decreased demand for deliveries.
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