Dive Brief:
- Yellow Corp. repaid a controversial $700 million CARES Act loan the LTL carrier had received from the Treasury Department in 2020, plus $151 million in interest, the bankrupt company announced Monday.
- After it folded last summer, the carrier’s bankruptcy process generated almost $2 billion in real estate sales, plus other money to repay taxpayers and other creditors via sales of trucks, trailers and miscellaneous other equipment.
- “This repayment demonstrates Yellow's absolute commitment to fulfilling its promise to the American taxpayers that its CARES Act loan would be repaid in full with interest,” Yellow Chief Restructuring Officer Matthew Doheny said in the announcement. A Treasury Department official confirmed the repayment to Trucking Dive.
Dive Insight:
The loan repayment wraps up one of the most closely monitored storylines in the largest bankruptcy in trucking history.
Spending $570,000 in congressional lobbying in 2020, the company received the federal money in July of that year while facing “potentially crippling economic dislocations,” as it described them, caused by the COVID-19 pandemic.
The loan was criticized as a bailout for the company from the Trump administration, and it was riddled with problems, according to a 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.”
Amid a clash with the Teamsters, which represented 22,000 Yellow workers, the company went belly-up anyway just three years after receiving the money.
With the government loan repaid, Yellow plans to follow through with its lawsuit against the Teamsters over an alleged breach of the union’s contract with the carrier, according to Yellow counsel Marc Kasowitz.
“So too will Yellow keep its promise to the 30,000 former Yellow employees who lost their good-paying jobs by seeking redress from the IBT for causing Yellow's bankruptcy as detailed in Yellow's breach of contract lawsuit against the IBT,” Kasowitz said.
The suit accuses the union of blocking its network modernization initative, an integration of its disparate operating companies it dubbed “One Yellow.” The union has called the lawsuit frivolous and said it contained “baseless allegations.”
The Treasury Department also received nearly 16 million shares, or 29.6%, of Yellow's stock, as collateral in the agreement. Treasury's equity stake is currently worth about $72 million, according to Yellow.
