Yellow Corporation (NASDAQ: YELL) and certain of its direct and
indirect subsidiaries (collectively, the “
Company”
or “
Yellow”) filed voluntary petitions for relief
under Chapter 11 (the “
Chapter 11 Cases”) of the
U.S. Bankruptcy Code (the “
Bankruptcy Code”) in
the United States Bankruptcy Court for the District of Delaware
(the “
Bankruptcy Court”) for the
Company’s planned operational wind-down.
To facilitate this process, the Company expects
to enter into an agreement, setting forth the terms and conditions
of a debtor-in-possession financing facility (the “DIP
Facility”). Upon approval by the Bankruptcy Court and the
satisfaction of the conditions set forth in the agreement, the DIP
Facility will provide the Company with needed liquidity which will
be used to support the businesses throughout the marketing and sale
process, including payment of certain prepetition wages.
The Company and its subsidiaries continue to
manage their businesses and properties as “debtors-in-possession”
under the jurisdiction of the Bankruptcy Court and in accordance
with the applicable provisions of the Bankruptcy Code and orders of
the Bankruptcy Court. The Company filed a number of motions with
the Bankruptcy Court designed to facilitate the Company’s orderly
wind-down of the businesses. Certain of these motions seek
authority from the Bankruptcy Court for the Company to make
payments upon, or otherwise honor, certain obligations that arose
prior to the filed voluntary petitions, including obligations
related to employee wages, salaries and benefits, taxes, and
certain vendors and other providers of goods and services essential
to the Company’s businesses. The Company expects that the
Bankruptcy Court will approve the relief sought in these motions on
an interim basis.
“It is with profound disappointment that Yellow
announces that it is closing after nearly 100 years in business,”
said Yellow’s Chief Executive Officer, Darren Hawkins. “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 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
(“IBT”) 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, IBT leadership was able to
halt our business plan, literally driving our company out of
business, despite every effort to work with them.”
Several years ago, Yellow recognized that it
needed to modernize operations to compete with non-union carriers
that increasingly dominated the industry. Yellow developed the
common-sense “One Yellow” business plan to make
Yellow more competitive while strengthening jobs and improving
customer service. One Yellow called for raising employees’ pay and
creating more jobs, while providing stability for
all stakeholders. One Yellow aimed to put Yellow on the right
path, fixing legacy issues created long ago, making Yellow the
industry-dominant company it once was.
The operational changes necessary to implement
One Yellow required approval from IBT leadership.
In August 2022, IBT leadership approved the first phase of One
Yellow in the western U.S. and the plan was a success: redundancies
were reduced, freight departed terminals earlier and customer
service improved. Unfortunately, despite Phase One’s approval and
success, IBT leadership implemented a nine-month blockade, halting
the remainder of Yellow’s business plan. This caused Yellow
irreparable harm.
In the spring, while their blockade of One
Yellow was ongoing, IBT 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 IBT, including a social media
post depicting a tombstone with Yellow’s name on it along with the
dates 1924-2023. 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, IBT 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, IBT leaders’ campaign against Yellow
caused grave concern among investors, drove away customers, and put
30,000 jobs at risk.
By summer, Yellow’s losses from the delay in
implementing One Yellow had reached more than $137 million in
adjusted EBITDA. On June 26, 2023, Yellow filed a lawsuit against
IBT citing breach of contract and loss of enterprise value. The
lawsuit is pending, and the damages have grown since. For more
information, please visit
https://investors.myyellow.com/news-releases/news-release-details/yellow-corporation-files-137-million-lawsuit-against.
As the IBT continued to stonewall and publicly
disparage Yellow, Yellow management kept employees informed that
the situation was increasingly dire. Yellow made it clear to IBT
leadership that their blockade of One Yellow severely constrained
Yellow’s cash flow and its ability to refinance debt. Yellow was
forced to take measures to preserve liquidity to give IBT leaders
more time to finally engage. Instead, IBT leaders announced a
strike against Yellow’s then-significantly wounded company.
Customers fled and business was not recoverable.
“While IBT leaders may believe they won a battle
against Yellow, it’s our employees and their families who have
lost,” said Hawkins. “We tried everything to work with IBT
leadership and did all we could to save employees’ jobs. We are
crushed by today’s announcement, yet we are grateful to our tens of
thousands of employees who took care of our customers until the
end. Our employees are professionals who, despite heavy hearts,
worked diligently to clear the docks, deliver remaining freight,
and close our terminal doors one last time. It is with this same
professionalism that we intend to wind down our business, maximize
recoveries for creditors and pay back the CARES Act loan in
full.”
Yellow is committed to helping its employees
find new work. Yellow has partnered with the American Trucking
Associations (ATA) to launch its first searchable
job database, specifically for Yellow employees. This initiative
intends to streamline job placement while giving ATA member
companies the ability to connect with thousands of skilled freight
and operations professionals, mechanics, logisticians and more. For
information on the initiative, please visit
https://www.trucking.org/jobseeker.
For more information about Yellow Corporation’s Chapter 11 case,
please visit https://dm.epiq11.com/YellowCorporation or contact
Epiq, the Company’s noticing and claims agent, at (866) 641-1076
(Toll Free), +1 (503) 461-4134 (International) or by e-mail at
YellowCorporationInfo@epiqglobal.com.
Legal Counsel
Kirkland & Ellis LLP is serving as the
Company’s restructuring counsel, Pachulski Stang Ziehl & Jones
LLP is serving as the Company’s Delaware local counsel, Kasowitz,
Benson and Torres LLP is serving as special litigation counsel,
Goodmans LLP is serving as the Company’s special Canadian counsel,
Ducera Partners LLC is serving as the Company’s investment banker,
and Alvarez and Marsal is serving as the Company’s financial
advisor.
Cautionary Statement Regarding
Forward-Looking Information
This press release contains certain
“forward-looking statements.” All statements other than statements
of historical fact are “forward-looking” statements for purposes of
the U.S. federal and state securities laws. These statements may be
identified by the use of forward-looking terminology such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “our vision,” “plan,” “potential,”
“preliminary,” “predict,” “should,” “will,” or “would” or the
negative thereof or other variations thereof or comparable
terminology. These forward-looking statements are subject to a
number of factors and uncertainties that could cause the Company’s
actual results to differ materially from those expressed in or
contemplated by the forward-looking statements. Such factors
include, but are not limited to: risks attendant to the bankruptcy
process, including the Company’s ability to obtain court approval
from the Bankruptcy Court with respect to motions or other requests
made to the Bankruptcy Court throughout the course of the Chapter
11 Cases, including with respect the DIP Facility; the effects of
the Chapter 11 Cases, including increased legal and other
professional costs necessary to execute the Company’s liquidation,
on the Company’s liquidity (including the availability of operating
capital during the pendency of the Chapter 11 Cases), results of
operations or business prospects; the effects of the Chapter 11
Cases on the interests of various constituents and financial
stakeholders; the length of time that the Company will operate
under Chapter 11 protection and the continued availability of
operating capital during the pendency of the Chapter 11 Cases;
objections to the Company’s restructuring process, DIP Facility, or
other pleadings filed that could protract the Chapter 11 Cases;
risks associated with third-party motions in the Chapter 11 Cases;
Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of
the Chapter 11 Cases in general; the Company’s ability to comply
with the restrictions imposed by the terms and conditions of the
DIP Facility and other financing arrangements; employee attrition
and the Company’s ability to retain senior management and other key
personnel due to the distractions and uncertainties; the Company’s
ability to maintain relationships with suppliers, customers,
employees and other third parties and regulatory authorities as a
result of the Chapter 11 Cases; the impact and timing of any
cost-savings measures and related local law requirements in various
jurisdictions; finalization of the Company’s annual and quarterly
financial statements (including finalization of the Company’s
impairment tests), completion of standard annual and
quarterly-close processes; risks relating to the delisting of the
Common Stock from Nasdaq and future quotation of the Common Stock;
the effectiveness of the Company’s internal control over financial
reporting and disclosure controls and procedures, and the potential
for additional material weaknesses in the Company’s internal
controls over financial reporting or other potential weaknesses of
which the Company is not currently aware or which have not been
detected; the impact of litigation and regulatory proceedings; the
impact and timing of any cost-savings measures; and other factors
discussed in the Company’s Annual Report on Form 10-K and
subsequent quarterly reports on Form 10-Q filed with the SEC. These
risks and uncertainties may cause the Company’s actual results,
performance, liquidity or achievements to differ materially from
any future results, performance, liquidity or achievements
expressed or implied by these forward-looking statements. For a
further list and description of such risks and uncertainties,
please refer to the Company’s filings with the SEC that are
available at www.sec.gov. The Company cautions you that the list of
important factors included in the Company’s SEC filings may not
contain all of the material factors that are important to you. In
addition, in light of these risks and uncertainties, the matters
referred to in the forward-looking statements contained in this
report may not in fact occur. The Company undertakes no obligation
to publicly update or revise any forward-looking statement,
including the Projections, as a result of new information, future
events or otherwise, except as otherwise required by law.
About the Company
Yellow is one of the largest, most comprehensive
logistics and less-than-truckload (“LTL”) networks
in North America, providing customers with regional, national,
and international shipping services throughout. Yellow’s principal
office is located in Nashville, Tenn., and is the holding
company for a portfolio of LTL brands including Holland, New
Penn, Reddaway and YRC Freight, as well as the logistics company,
Yellow Logistics.
Media Contact: |
media@myyellow.com |
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Investor Contact: |
investor@myyellow.com |
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