One of the largest U.S. privately-owned auto transport companies is quietly mounting a long-shot bid – with increasing interest from the Biden administration – to rescue trucking giant Yellow Corp (YELLQ.PK) from bankruptcy liquidation and bring back some 30,000 union jobs. The previously unreported effort by Jack Cooper Transport, a trucking company that counts General Motors (GM.N) as a client, would depend on the government extending terms for Yellow’s $700 million in unpaid COVID pandemic loans. The bid would also require the cooperation of Yellow’s 22,000 Teamsters workers, who have been told to expect layoffs or termination.
The potential “going concern” bid from Jack Cooper, which could be presented to the Treasury Department in November, is a significant political and economic test for the Biden administration. It has made supporting the nation’s union workers a centerpiece of its domestic policy. It could also be the final nail in the coffin for Yellow, whose once-dominant market share has shrunk as it struggled with declining shipping demand and rising costs.
In the end, however, the outcome is likely to depend on the willingness of the Treasury Department to extend the repayment period for Yellow’s loans, which are due in September 2024. Jack Cooper’s efforts to secure such an extension, led by its executive chair Sarah Amico, who ran unsuccessfully as a Democratic U.S. Senate candidate in 2020, are gaining momentum. Several Democrats and Republicans, including Sherrod Brown, Roger Marshall, and Bernie Sanders, have formally asked the Treasury Department to consider such a move.
While the Teamsters’ withdrawal of a planned strike this week averted a customer exodus from Yellow, the company’s deteriorating financial position and uncertainty around its future have prompted many shippers to switch carriers. As a result, freight volumes have tumbled 80% this month. The looming liquidation would further depress prices in a freight industry already struggling with lower rates and demand, analysts say.
Estes, which bought Yellow’s trucks and terminal assets in the auction that preceded its bankruptcy filing, has offered $1.3 billion for the trucks and $2 billion for the real estate. The deal aims to allow Yellow to repay the debt it incurred before its collapse and pay off creditors, including the Treasury.
If Estes’ bid is successful, it would be followed by an auction of Yellow’s unused vehicles and equipment in December, which could yield more than $3 billion in sales. That money would satisfy Yellow’s secured creditors, including the Treasury and the White House National Economic Council, whose co-chairman, Lael Brainard, is involved in the talks. The auction is a crucial milestone for the bankruptcy proceeding, which will be overseen by federal judge Henry Goldblatt, who has ruled that Yellow cannot use the federal court process to slash its liabilities to employees and smash up the company to buy up its assets at rock-bottom prices. He is expected to issue a ruling on that matter in early 2024.