Yellow files for Chapter 11 bankruptcy
Making good on the claims made on July 31, Yellow Corp. filed for Chapter 11 bankruptcy a week later on Aug. 6.
The less-than-truckload motor carrier filed for voluntary Chapter 11 bankruptcy with the District of Delaware Bankruptcy Court. Chapter 11 is typically used to reorganize a business. Many times it allows a company to stay in business while restructuring its obligations.
While restructuring can allow a business to continue to operate, Yellow and its subsidiaries are using Chapter 11 to facilitate shutting the company down.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow’s Chief Executive Officer, Darren Hawkins said in a news release. “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’s management plans to enter into an agreement that will give the company “needed liquidity which will be used to support the businesses throughout the marketing and sale process.”
As part of the motions filed with the bankruptcy court, Yellow’s officials are seeking authority to make payments on obligations that arose before the filing. Listed among those obligations are employee wages, salaries and benefits.
“The company expects that the bankruptcy court will approve the relief sought in these motions on an interim basis,” the press release states.
Hawkins lays much of the blame on Yellow’s demise at the feet of the International Brotherhood of Teamsters.
Yellow employees took great pride in servicing customers from big box stores to small family businesses across America. Its 30,000 freight professionals, both union and non-union employees, were the unsung heroes throughout the pandemic, delivering goods to every state, ensuring that our supply chain kept moving and our economy remained strong.
“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, (Teamster’s) leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
The news release detailed Yellow’s attempts to restructure several years ago, to compete with non-union motor carriers.
“In the spring, while their blockade of One Yellow was ongoing, (Teamster) 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 (the Teamsters), including a social media post depicting a tombstone with Yellow’s name on it along with the dates 1924-2023,” the press release states. “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, (Teamster) 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, (Teamster) leaders’ campaign against Yellow caused grave concern among investors, drove away customers, and put 30,000 jobs at risk.”
The Teamsters have yet to publicly react to the Aug. 6 bankruptcy filing.
However, when the news broke on July 31 that Yellow was shutting down, the Teamsters were not surprised by the news.
“Today’s news is unfortunate but not surprising. 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. This is a sad day for workers and the American freight industry,” said Teamsters General President Sean M. O’Brien in a July 31 news release.
A class-action lawsuit has been filed against Yellow Corp. for alleged violations of the Worker Adjustment and Retraining Notification (WARN) Act.
On Aug. 1, Armando Rivera filed a class-action lawsuit in a Delaware federal court against Yellow. The lawsuit claims that the company violated the WARN Act by not providing 60 days advance written notice of terminations.
According to the Department of Labor, The WARN Act requires employers with 100 or more full-time employees to provide at least 60 calendar days advance written notice of a worksite closing affecting 50 or more employees, or a mass layoff affecting at least 50 employees and one-third of the worksite’s total workforce or 500 or more employees at the single site of employment during any 90-day period.
Not all dislocations require a 60-day notice. The WARN Act makes certain exceptions to the requirements when employers can show that layoffs or worksite closings occur due to faltering companies, unforeseen business circumstances and natural disasters. In such instances, the WARN Act requires employers to provide as much notice to their employees as possible.
A second class-action lawsuit was filed on behalf of Georgia employees of the LTL carrier and its subsidiaries.
The bankruptcy case has yet to have a hearing date set. LL
Staff Writer Tyson Fisher contributed to this report.
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