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Dive Brief:
- Yellow Corp. paid off a controversial $700 million CARES Act loan the LTL company received from the Treasury Department in 2020, plus $151 million in interest; the bankruptcy was announced on Monday.
- After folding last summer, the carrier’s bankruptcy proceedings generated nearly $2 billion in property sales, plus other money to repay taxpayers and other creditors through sales of trucks, trailers and various other equipment.
- “This repayment demonstrates Yellow’s absolute commitment to fulfilling its promise to the American taxpayer that its CARES Act loan will be repaid in full with interest,” Yellow’s Chief Restructuring Officer Matthew Doheny said in the release. A Treasury official confirmed the repayment to Trucking Dive.
Dive Insight:
The loan repayment concludes one of the most closely watched storylines in the largest bankruptcy in trucking history.
Spending $570,000 lobbying Congress in 2020, the company received the federal money in July of that year while facing what it described as “potentially crippling financial shocks” caused by the COVID-19 pandemic.
The loan was criticized as a bailout for the company by the Trump administration and was fraught with problems, according to congressional report in June.
“Despite receiving bipartisan support,” Doheny said, “Yellow’s CARES Act loan would not have been possible without the leadership of President Trump and [then-Treasury] Secretary Mnuchin, for which Yellow is and remains grateful.”
In the midst of a conflict with the Teamsters, which represented 22,000 Yellow workers, the company went bust anyway just three years after receiving the money.
By repaying the state loan, Yellow plans to continue its lawsuit against the Teamsters for allegedly violating the union’s contract with the carrier, according to Yellow counsel Marc Kasowitz.
“So Yellow will keep its promise to the 30,000 former Yellow employees who lost their well-paying jobs by seeking compensation from IBT for Yellow’s bankruptcy as described in Yellow’s breach of contract lawsuit against IBT,” Kasowitz said.
The suit accuses the union of obstructing its network modernization initiative, an integration of its disparate operating companies that it dubbed “One Yellow.” The union called the lawsuit frivolous and said it contained “baseless allegations.”
The Treasury also received nearly 16 million shares, or a 29.6% stake in Yellow, as collateral in the deal. Treasury’s equity stake currently stands at about $72 million, according to Yellow.