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Trucking giant Yellow has filed for Chapter 11 bankruptcy, marking the final chapter for the 99-year-old company.
Source – Yellow Trucking Corp.
Trucking giant Yellow Corp. announced Sunday it declared bankruptcy and will shut down following years of ballooning debt.
The 99-year-old trucking company filed for Chapter 11 relief in the U.S. Bankruptcy Court for the District of Delaware on Sunday, according to court records.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow Corp. CEO Darren Hawkins wrote in a statement Sunday night. “Today, it is not common for someone to work at one company for 20, 30, or even 30 years, yet many at Yellow did.”
While a Chapter 11 filing is used to restructure debt while operations continue, Yellow, like other trucking companies in recent years, will liquidate and the U.S. will join other creditors unlikely to recover funds extended to the company.
The trucking company racked up around $1.5 billion in debt as of late March after having received $700 million in pandemic-era loans from the federal government in 2020 on national security grounds, according to The Associated Press.
As of June 30, the company said it has paid $67 million in cash interest on the loan, which is due in 2024. A congressional probe last month found the Treasury and Defense departments “made missteps” in the granting of the loan.
On July 30, according to The Washington Post, the union announced that Yellow had ceased operations, casting 30,000 people out of work, including 22,000 of its members.
Only Yellow’e secured creditors usually have priority in bankruptcy proceedings, including Apollo Global Management, whose $600 million loan to Yellow matures in 2024. Another is the Treasury Department, which in July 2020 provided the company with a $700 million coronavirus relief loan.
Questions remain about how much the federal government will recover; Yellow’s debt has grown to $729.3 million because of interest. And many experts say it’s unclear whether taxpayers would get back any money at all.
And the 30 percent equity stake that the Treasury Department received in return for granting the loans is probably “worthless,” Adam Levitin, a law professor and bankruptcy expert at Georgetown University, wrote in a blog post on Wednesday.
“There’s no way to sugar coat this: Treasury’s screwed on the Yellow loans,” Levitin added.
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