Senators Urge Yellow Bailout With Thousands of Jobs at Stake

Sens. Elizabeth Warren (D-Mass.) and Edward Markey (D-Mass.) are the latest high-profile lawmakers calling on the Treasury Department to save Yellow Corp. and the nearly 30,000 jobs lost with the company’s liquidation.

The Democrats follow eight other senators who have written to Treasury Secretary Janet Yellen, including Bernie Sanders (I-Vt.), Amy Klobuchar (D-Minn.) and Roger Marshall (R-Kan.), asking the department to delay the maturity date of a $700 million Paycheck Protection Program (PPP) loan that Yellow obtained in 2020.

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The two Massachusetts senators said they are “aware that the pandemic-era loan to Yellow drew criticism from the public and from Department of Defense staff, largely due to a pending lawsuit from the Department of Justice ‘alleging the company overcharged the U.S. government and then lied about it’” in 2018. Yellow, which had been accused of systematically overcharging for carrier services when shipping freight for the U.S. military, paid $6.85 million to settle that case in March 2022.

“However, we remain very concerned about the harm that may come to the workers at Yellow if an acquirer does not emerge because the federal government refused to extend the loan term,” Warren and Markey said.

The senators said that while liquidation may cover secured debts and administrative expenses, the funds likely will only result in partial payment to unsecured creditors like Yellow workers. Yellow could also accept a bid by another company that would save the jobs currently at risk, they pointed out.

Standing in the politicians’ corner are the Teamsters, which represented 22,000 of the 30,000 employees put out of work by Yellow’s insolvency. The union has called on Congress to reform U.S. bankruptcy laws to ensure workers are first in line for financial restitution when a corporation goes under.

“Teamsters remain laser focused on Yellow’s bankruptcy proceedings, and we thank Senator Markey and Senator Warren for standing up for American workers,” said Sean O’Brien, general president of the Teamsters, in a statement. “Working with lawmakers and the federal government, our union is doing everything in our power to protect workers and union jobs in the industry in the wake of Yellow’s reckless corporate mismanagement.”

The Teamsters have repeatedly claimed that they voluntarily sacrificed more than $5 billion in wage and pension concessions over the past 20 years to help keep Yellow afloat.

Logistics and transportation industry experts have questioned the feasibility of the senators’ plea, given Yellow’s customer exodus prior to its bankruptcy, and the process of the wind-down, in which terminals and vehicles are being auctioned off.

When a report from Reuters indicated that Jack Cooper Transport, a Missouri fleet management company and auto hauler, is preparing a “long-shot” bid for Yellow, Michigan State University supply chain management professor Jason Miller told Sourcing Journal the revived trucking company would have “no freight to haul.”

Dr. Tom Goldsby, professor and Haslam Chair of Logistics at the University of Tennessee’s Global Supply Chain Institute, framed the Jack Cooper bid as little more than a “provocative overture.”

“I think that most everyone had just assumed that Yellow assets were getting sold off and those jobs were lost. I can understand where politicians would be interested in resurrecting the company, but there would need to be some fundamental changes to the company’s composition and operations,” Goldsby said. “It would take an industry leader with an awful lot of gravitas to make this deal viable and pull Yellow from the dead.”

Jack Cooper’s reported bid is even more perplexing when accounting for the company’s size and business model. Not only is Jack Cooper smaller than the less-than-truckload (LTL) players vying for Yellow’s assets, the company doesn’t move freight—its trucks haul new and used vehicles across the U.S.

“Auto carrier transportation is about as far away from LTL as ocean shipping is to parcel delivery,” Goldsby said. “They both involve people and transportation vehicles, but that’s about it.”

Nevertheless, Markey and Warren ended their letter by requesting new information from the Treasury.

They asked whether the department would investigate the extent to which delaying the maturity of the $700 million loan would protect former Yellow workers from economic harm, while also identifying guardrails to ensure that this protection doesn’t cost taxpayers.

And in the event the Treasury finds that the delay protects the former employees, the senators inquired if the department will consider requesting the authority to delay the loan due date.