Yellow, the trucking company that shut down operations and filed for bankruptcy protection this summer, on Wednesday rejected a trucking industry executive’s offer to buy and restructure its company.
In a letter sent to the potential buyer, Yellow’s lawyers claimed the offer was “not viable”, saying they had received no indication that the offer had the support of the company’s creditors. company, including from the Treasury Department, which had provided an emergency loan. to business during the pandemic.
The letter, a copy of which was reviewed Thursday by The New York Times, also says the plan to revive Yellow underestimates the costs and difficulties of such an effort. The offer would not be “confirmable by a bankruptcy court or in the best interest of Yellow’s stakeholders,” the letter said.
Yellow’s management intends to soon finalize its own bankruptcy plan, which involves selling the company’s assets to different buyers. Business this week published the results from an auction in which winning bidders pledged to spend nearly $1.9 billion on 128 terminals, Yellow’s most valuable assets. On Dec. 12, the company plans to seek approval of the sales from a federal bankruptcy judge in Delaware.
The letter is a blow to the bid led by Sarah Riggs Amico, executive chairman of auto transport company Jack Cooper, to take over and relaunch Yellow. His project has the support of the International Brotherhood of Teamsters, the union that represented most of Yellow’s employees. She intended to rehire many of these workers and streamline the company’s operations.
On Thursday, Ms. Riggs Amico defended her proposal, saying it had strong financial backing and was developed with the help of dozens of trucking experts, including former Yellow executives.
His proposal needed the support of the Treasury and the Central State Pension Fund, two of Jaune’s biggest creditors. For Ms. Riggs Amico’s plan to work, the Treasury, a secured creditor, would have to postpone repayment of the $700 million it lent to Yellow in 2020 under the Trump administration, which comes due next year. The bid also needed the support of the pension fund, the largest unsecured creditor. Ms. Riggs Amico’s plan offered the fund $500 million in preferred stock in the new company she had hoped to create with Yellow’s assets and employees.
His plan called for employing some 15,000 people, about half the number who worked for Yellow before its executives closed the company and filed for bankruptcy. Several members of Congress had urged the Treasury to examine Ms. Riggs Amico’s plan, saying it could save jobs.
Ms. Riggs Amico said Thursday that she had submitted a new, much smaller offer to buy Yellow’s assets that were not sold in the auction, which include the remaining terminals and its trucks. According to this plan, the new company would have at least 12,000 employees. “We look forward to working with the debtor to save thousands of jobs that must not be permanently lost,” Ms. Riggs Amico said, referring to Yellow.
But trucking industry analysts say it would be difficult to revive Yellow because many of its customers were likely already using other trucking companies. And many of its employees — about 10,000 — appear to have found jobs elsewhere, said Avery Vise, vice president of trucking at FTR, a research firm specializing in the freight industry.