Yellow, the trucking company that shut down its operations and filed for bankruptcy protection this summer, on Wednesday rejected a trucking executive’s bid to buy and restructure its business.
In a letter sent to the prospective buyer, Yellow’s lawyers contended that the bid was “not viable,” saying they had not gotten any indication that the bid had the support of the company’s creditors, including the Treasury Department, which had made an emergency loan to the company during the pandemic.
The letter, a copy of which was reviewed by The New York Times on Thursday, also said the plan to revive Yellow underestimated the costs and difficulties of such an effort. The bid would not be “confirmable by a bankruptcy court or in the best interests of Yellow’s stakeholders,” the letter said.
Yellow’s management intends to soon complete its own bankruptcy plan, which involves selling off the company’s assets to different buyers. The company this week released the results of an auction in which the winning bidders committed to spend nearly $1.9 billion on 128 terminals, Yellow’s most valuable assets. On Dec. 12, the company plans to seek approval for the sales from a federal bankruptcy judge in Delaware.
The letter is a blow to the bid led by Sarah Riggs Amico, executive chairwoman of the auto hauling trucking company Jack Cooper, who proposed taking over and reviving Yellow. Her plan has the backing of the International Brotherhood of Teamsters, the union that represented most of Yellow’s employees. She had intended to hire back many of those workers and streamline the company’s operations.
Ms. Riggs Amico did not immediately provide a comment on Yellow’s letter.
Her proposal needed the support of the Treasury and the Central States Pension Fund, two of Yellow’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 had lent to Yellow in 2020 under the Trump administration, and that comes due next year. The bid also needed the support of the pension fund, the biggest unsecured creditor. Ms. Riggs Amico’s plan offered the fund $500 million in preferred shares in the new company that she had hoped to create with Yellow’s assets and employees.
Her plan envisioned employing some 15,000 people, about half the number that had worked for Yellow before its leaders shuttered the company and filed for bankruptcy. Several members of Congress had urged the Treasury to consider Ms. Riggs Amico’s plan, saying it could save jobs.
But trucking analysts said it would be hard to revive Yellow because many of its customers were probably already using other trucking companies. And many of its employees — some 10,000 of them — appeared to have found jobs elsewhere, said Avery Vise, vice president of trucking at FTR, a research firm that focuses on the freight industry.