The Trump administration just lent $700 million to a trucking company sued for ripping off taxpayers May 7th, 2017 Rock Springs, Wyoming, USA Shutterstock YRC Freightliner Tractor pulls a set of white "pup" trailers. The company eventually settled the dispute without admitting wrongdoing but was forced to pay a $6.85 million fine. The company had received that loan during the pandemic, despite the fact that at the time it was facing charges of defrauding the government by overbilling on shipments of items for the US military. It bumped up 14 cents a share on Friday, but still remained a so-called penny stock. Yellow’s stock lost 82% of its value between the time of that loan and Thursday close after reports of the bankruptcy plans, closing at only 57 cents a share. And the company still owed the Treasury department more than $700 million according to its most recently quarterly report, nearly half of the long-term debt on its books. The company received a $700 million loan from the federal government in 2020, a loan that resulted in taxpayers holding 30% of its outstanding stock. The closing is bad news not only for its employees and its customers, who generally used Yellow because it offered some of the cheapest rates in the trucking sector, but also for US taxpayers. The Teamsters said Monday the company is filing for bankruptcy. There were reports last week that a bankruptcy filing would come by July 31, although the company said last week only that it continued to be in talks with the Teamsters and that it was considering all of its options. Both were far more profitable in recent years than Yellow, which posted only a narrow operating profit in 20 and a $9.3 million operating loss in the first quarter. There are two other national competitors in Yellow’s segment of the trucking market which are also unionized, ABF Freight and TForce. “Now their debt service is just enormous,” he said, pointing to $1.5 billion in debt on its books. He said the company began taking on significant amount of debt 20 years ago in order to acquire other trucking companies. “The Teamsters had made a series of painful concessions that brought them close to wage parity with nonunion carriers,” said Tom Nightingale, CEO of AFS Logistics, a third-party logistics firm that places about $11 billion worth of freight annually with different trucking companies on behalf of shippers. Experts in the field said it was primarily an unaffordable amount of debt, more than the cost of the union contract, that did in Yellow. While the company is based in Nashville, Tennessee, it is a national company with terminals and employees spread between more than 300 terminals nationwide. This is a sad day for workers and the American freight industry,” said Teamsters President Sean O’Brien in a statement.Ĭompany officials did not respond to numerous requests for comment Sunday and Monday. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. “Today’s news is unfortunate but not surprising. The union said early Monday that it had been notified of the shutdown. While the union agreed not to go on strike against Yellow, it could not reach an agreement on a new contract with the trucking company, according to a memo sent to local unions Thursday by the Teamsters’ negotiating committee. The union granted the company an extra month to make the required payments.īut by midweek last week, the company had stopped picking up freight from its customers and was making deliveries only of freight already in its system, according to both the union and Satish Jindel, a trucking industry consultant. Just a week ago the union canceled a threatened strike that had been prompted by the company failing to contribute to its pension and health insurance plans. The unionized company has been in a battle with the Teamsters union, which represents about 22,000 drivers and dock workers at the company. Yellow Corp., a 99-year-old trucking company that was once a dominant player in its field, halted operations Sunday and will lay off all 30,000 of its workers.
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