After days of speculation about the company’s fate, LTL carrier Yellow has officially announced plans to file for bankruptcy and permanently end operations.
In a statement issued late on Sunday, August 6, the Nashville-headquartered Yellow announced that the company filed for voluntary Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware as part of plans to liquidate and wind down operations.
Yellow says that the company is working with a debtor-in-possession financing facility to facilitate the orderly end of the nearly 100 year old company’s operations.
With the closing of Yellow, approximately 30,000 union and non-union jobs were lost.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” said Yellow’s Chief Executive Officer, Darren Hawkins. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
Yellow blames the closure on the refusal of the International Brotherhood of Teamsters (IBT) to agree to the “One Yellow” business plan. The One Yellow plan involved combining the operations of YRC Freight, Reddaway, Holland, and New Penn into a single carrier providing both regional and long haul services. The plan would have required the closing of some facilities and would have converted some drivers into “utility worker” positions that would require local driving and dock work.
“All workers and employers should take note of our experience with the International Brotherhood of Teamsters and worry,” said Hawkins. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
Yellow provided a detailed account of the battle against the IBT for One Yellow:
“The operational changes necessary to implement One Yellow required approval from IBT leadership. In August 2022, IBT leadership approved the first phase of One Yellow in the western U.S. and the plan was a success: redundancies were reduced, freight departed terminals earlier and customer service improved. Unfortunately, despite Phase One’s approval and success, IBT leadership implemented a nine-month blockade, halting the remainder of Yellow’s business plan. This caused Yellow irreparable harm.
In the spring, while their blockade of One Yellow was ongoing, IBT leaders demanded that Yellow open its contract nearly one year early, and Yellow agreed, yet its goodwill was met with hostility. Instead of negotiating a contract, Yellow faced months of public insult from IBT, including a social media post depicting a tombstone with Yellow’s name on it along with the dates 1924-2023. This ruthless campaign included repeated public taunts calling for Yellow’s demise and was intended to put Yellow out of business. At the same time, IBT leadership spread false claims that Yellow was trying to exact “concessions” from its union employees. Nothing was further from the truth. Combined with months of refusals to negotiate, IBT leaders’ campaign against Yellow caused grave concern among investors, drove away customers, and put 30,000 jobs at risk.
By summer, Yellow’s losses from the delay in implementing One Yellow had reached more than $137 million in adjusted EBITDA. On June 26, 2023, Yellow filed a lawsuit against IBT citing breach of contract and loss of enterprise value. The lawsuit is pending, and the damages have grown since.
As the IBT continued to stonewall and publicly disparage Yellow, Yellow management kept employees informed that the situation was increasingly dire. Yellow made it clear to IBT leadership that their blockade of One Yellow severely constrained Yellow’s cash flow and its ability to refinance debt. Yellow was forced to take measures to preserve liquidity to give IBT leaders more time to finally engage. Instead, IBT leaders announced a strike against Yellow’s then-significantly wounded company. Customers fled and business was not recoverable.”
“While IBT leaders may believe they won a battle against Yellow, it’s our employees and their families who have lost,” said Hawkins. “We tried everything to work with IBT leadership and did all we could to save employees’ jobs. We are crushed by today’s announcement, yet we are grateful to our tens of thousands of employees who took care of our customers until the end. Our employees are professionals who, despite heavy hearts, worked diligently to clear the docks, deliver remaining freight, and close our terminal doors one last time. It is with this same professionalism that we intend to wind down our business, maximize recoveries for creditors and pay back the CARES Act loan in full.”