Bankrupt trucker Yellow repays $700 million Covid loan, as unsecured creditors press for billions more

Trucks and trailers sit in a Yellow Corp. facility lot, closed after the freight trucking company ceased all operations, in Las Vegas, Nevada, on July 31, 2023. 

Patrick T. Fallon | AFP | Getty Images

The bankrupt trucking company Yellow has fully repaid a controversial $700 million Covid loan to the U.S. Treasury Department, plus more than $151 million in interest, the company said Monday.

The announcement came nearly two months after a federal bankruptcy judge in Delaware approved Yellow’s request to sell most of its shipping centers and real estate for nearly $1.9 billion.

Meanwhile, unsecured creditors in the bankruptcy case, including employee pension funds, are seeking billions of dollars in payouts from what remains of the company.

The $1.3 billion in debt that Yellow had coming due this year included the $700 million loan it received in 2020 under the CARES Act, which authorized the Treasury Department to make loans to companies that were “critical to maintaining national security” during the Covid-19 pandemic.

Top Trump administration officials pushed Treasury officials to approve the loan over the objections of the Defense Department, which determined that Yellow was not “critical to maintaining national security.”

By mid-2023, as it headed toward bankruptcy, Yellow had made only one payment on the loan: $230, in July 2021.

In a statement Monday announcing the loan repayment, Yellow’s chief restructuring officer Matthew Doheny said, “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.”

In an apparent nod to the controversy over the loan, Doheny said that “despite receiving bipartisan support, Yellow’s CARES Act loan would not have been possible without the leadership of President [Donald] Trump and [Treasury] Secretary [Steven] Mnuchin for which Yellow is and remains grateful.” 

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Yellow’s management has blamed the Teamsters labor union for a liquidity crisis last year, due to the union’s refusal to defer benefits payments the company owed last year to the Central States Pension Fund. The union had threatened to strike in July if the payment was not made.

Teamsters General President Sean O’Brien in August said, “Yellow’s dysfunctional, greedy C-suite failed to take responsibility for squandering all that cash. They still don’t.”

“They shamelessly pin their corporate incompetence on working people,” O’Brien said.

Yellow’s lawyer Mark Kaskowitz in a statement Monday again blamed the International Brotherhood of Teams leadership, under O’Brien, for taking a “militant zero-sum approach to dealing with Yellow that prevented Yellow from completing its network optimization.”

CNBC has requested comment from the Teamsters on Kaskowitz’s statement.

Central States and other pension funds are among the unsecured creditors seeking billions of dollars in the Yellow bankruptcy case.

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