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A struggling trucking business700 million dollars in loans during the pandemicThe federal government could be forced to file for Chapter 11 bankruptcy this summer because of a dispute with unions, which could put American taxpayers on the hook for bankrupt companies.
Yellow Corporation (formerly known as YRC Worldwide) has been in financial trouble for several years. The company lost more than $100 million in 2019 and has more than $1.5 billion in outstanding debt, including government bonds. 2022 YRC, which provides ration packages, protective gear and other supplies to military bases, agreesPay $6.85 millionsolve onefederal lawsuitAccused of defrauding the Ministry of Defense.
It's 2020 the Trump administration.Connect with the company and its leadersHe agreed to give the company a pandemic loan in exchange for the federal government taking a 30% stake in the company.
Three years later, Žuti was on the verge of bankruptcy.
Since receiving the loan, the company has changed its name, restructured its operations, and its shares have fallen. Yellow had $1.5 billion in outstanding debt at the end of March, including about $730 million owed to the federal government. Yellow paid about $66 million in interest on the loans, but only paid them offThe principal amount of the loan is DKK 230, expires next year.
Yellow sued the International Brotherhood of Truckers on Tuesday to block the company's restructuring plans, accusing the union of more than $137 million in damages. The company said it was "taking urgent steps to try to save itself", while the union tried to "cause the financial collapse of Yellow".
The company's financial woes are the latest example of how some of the trillions of dollars pumped in quickly during the pandemic have been misdirected, mismanaged or misused.obtained by fraud. Federal regulators and government agencies have expressed concern about signs of fraud and loan defaults.
The Office of the Special Inspector General for Pandemic Recovery, an independent agency within the U.S. Treasury Department that reviews some bailouts, warned last month of "alarming default rates of borrowers who haven't even paid the interest" on the loans. The bureau warned defaults on pandemic loans could increase over the next two years as payments come due.
On Tuesday, the U.S. inspector general disbursed the Small Business Administration about $1.2 trillion in pandemic loans,he said in the reportMore than $200 billion, or 17 percent, was paid to "potentially fraudulent actors."
The yellow loan allowed the company to stay afloat for a while and start a restructuring plan. But economic problems and a dispute with the Teamsters union over new contract terms left Yellow in a precarious financial situation.
In May, the company announced aA loss of $54.6 million in the first quarteriMoody's lowered the credit ratingConcerns about disputes with unions. Yellow shares have fallen more than 70% over the past year to $0.99 per share.
The company warned union officials that the dispute was putting Yellow's fate in jeopardy. Union officials claimed the company was mismanaged and the concessions it sought were unfair.
Sean O'Brien, general manager of the International Brotherhood of Teamsters, said in a video, "Yellow has been unable to operate itself effectively for a long time, and now the company says it will run out of trucks by August." most of your money.”Broadcast messages on FacebookSend this month to the yellow trade unionists. "These executives don't know what they're doing and they've driven this company to rock bottom."
In a statement Tuesday, O'Brien called the allegations in the Yello case "baseless and unfounded," and said the company's management failed to honor the terms of its contracts and meet employee expectations.
The union's current contract expires next year. The main points of contention are whether hundreds of yellow truck drivers should start loading and unloading goods at the terminal and a proposal to give the company more power to decide where the drivers work. Yellow needs the union to agree to the next phase of its restructuring plan to seek additional funding and pay down debt.
The company said it still intends to repay the loan it took out from the government and is negotiating in good faith to try to save the jobs of its 30,000 employees.
"Yellow is working with all stakeholders in Washington and remains committed to contract negotiations with I.B.T," Yellow CEO Darren Hawkins said of the union. "Žuto's job is to protect 30,000 jobs." Primary task.
Yellow said in the lawsuit that he sought the Biden administration's help in reaching a deal to save the company, but the unions rebuffed the White House's efforts. Yellow contacted Sen. Bernie Sanders of Vermont for help, the lawsuit says, and claims that Mr. Sanders' office showed no interest in helping because Yellow was a loan made by the Trump administration.
The White House admitted that talks were held with yellow workers and the union, but refused to interfere further.
"Our administration has been in contact with both sides, but we do not comment on legal disputes," White House spokesman Michael Kikukawa said. "The loans in question were made by the Trump administration."
Mr. Sanders' office did not respond to a request for comment. A Treasury Department spokeswoman said the agency continued to monitor loans disbursed through the Pandemic Recovery Program under the previous administration.
The Ministry of Finance also owns almost 30 percent of the ordinary shares of Žuto, and the loan is secured by the company's assets. If Yellow declares bankruptcy and has to go into liquidation, the U.S. government would take over most of the company's truck fleet and assets.
The yellow loan, part of the $2.2 trillion pandemic relief bill passed by Congress in 2020, raised questions of cronyism from the start.
A report last year by the Democratic staff of the House Select Subcommittee on the coronavirus crisis found that the money was distributed over the objections of career Defense Department officials and suggested that senior Trump administration officials intervened to ensure that Yellowget special treatmentdespite concerns about his eligibility for emergency care. In addition to its deep ties to the Trump administration, the company has faced years of legal and financial trouble and has a strong lobbying presence in Washington.
While there are questions about whether Yellow is vital to national security, it is one of the largest transportation companies in the United States, and its collapse would have ramifications throughout the country's supply chain.
UPS and ABF Freight also have itnegotiateContract issues with truck drivers are adding to uncertainty across the industry.
Chris SpeerThe executive director of the American Trucking Association urged the union and Yellow to work with federal mediators on a new contract to ensure the company doesn't go bankrupt.
"This will have a serious impact on the economy and supply chains," Mr Speer said. "Capacity is already tight."
Bruce Chan, a transportation analyst at investment bank Stifel, said that Yellow's shutdown would significantly increase shipping costs in the United States and force companies to find other carriers to deliver shipments to the "homeless." He noted that vulnerable transport companies were struggling under pressure from changing consumer demand, which had shifted from goods to services.
While Huang has managed to get out of financial trouble in the past, Mr Chen likens the current union dispute to "squeezing blood from a stone".
"It seems pretty tough for them," he said.
Alan Rappeport is an economic policy reporter based in Washington. He covers the Ministry of Finance and writes on taxes, trade and tax issues. He previously worked for the Financial Times and The Economist. @arapa wound
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