A troubled trucking firm that received a $700 million pandemic-era loan from the federal government may be forced to file for bankruptcy this summer due to a labor disagreement, potentially leaving American taxpayers with a failing corporation.
Yellow, formerly known as YRC Worldwide, has been experiencing financial difficulties for some years. In 2019, the firm lost more than $100 million and had more than $1.5 billion in debt, including the government loan. In 2022, YRC agreed to pay $6.85 million to resolve a federal lawsuit accusing company of cheating the Defense Department.
In 2020, the Trump administration agreed to provide the corporation with a pandemic relief loan in exchange for the federal government taking a 30% equity share in the company.
Yellow is on the edge of bankruptcy three years later.
The company has changed its name, revamped its operations, and seen its stock price drop since getting the loan. Yellow’s outstanding debt was $1.5 billion as of the end of March, including around $730 million owing to the federal government. Yellow has paid almost $66 million in interest on the loan, but has only returned $230 of the principle, which is due next year.
Yellow filed a lawsuit against the International Brotherhood of Teamsters on Tuesday, accusing the union of incurring more than $137 million in damages. The firm stated that it is taking “immediate steps to try to save itself” and that the union is attempting to “cause Yellow’s economic ruin.”
The company’s financial difficulties are the latest illustration of how trillions of dollars pushed out hastily during the epidemic were misdirected, mishandled, or gained unlawfully. Federal watchdogs and other authorities have voiced concern about evidence of fraud and loan default.
