Behind the last-ditch effort to save a trucking company that owes $700M to taxpayers
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When trucking company Yellow went bankrupt in August, it seemed that U.S. taxpayers would eat much of a $700 million loan from the pandemic-era CARES Act.
Why it matters: There's an offer on the table that would repay every dime. But a large number of prominent politicians, from both sides of the aisle, are asking the Treasury Department to punt.
Details: Estes Express earlier this fall offered $1.53 billion "stalking horse" bid for Nashville-based Yellow's shipment centers. That would easily be enough to repay around $500 million in debt held by senior lender Citadel — which purchased the notes from Apollo, post bankruptcy — plus other creditors and the CARES Act loan.
- Then we got a wrinkle, just ahead of the bankruptcy auction kicking off this past Tuesday. It was a bid led by the owner of auto trucking company Jack Cooper to restart Nashville-based Yellow, not just scoop up logistics properties or other assets.
- This new proposal, as reported by the NY Times, would repay private creditors immediately, but postpone the Treasury loan repayment to 2026 from 2024.
Politics: It's this second deal that's being supported, at least in principle, by a chorus of U.S. senators, including Elizabeth Warren (D-Mass.), Josh Hawley (R-Mo.), Sherrod Brown (D-Ohio), Roger Marshall (R-Kan.), and Bernie Sanders (I-Vt.).
- Each signed public letters asking Treasury to extend the maturity date of the CARES Act loan to Yellow, although it remains unclear if Treasury has the legal right to do so.
Wait, what? The political argument is that Sarah Amico, the exec chair of Jack Cooper and a former U.S. Senate candidate in Georgia, could rehire thousands of Teamsters union truckers and others who lost their jobs when Yellow shut down. Moreover, doing so would be in keeping with the spirit of the original loan.
- The risk, of course, is that this is pulling defeat from the jaws of victory for U.S. taxpayers, particularly given that Jack Cooper itself filed for bankruptcy in 2019 before restructuring.
- Moreover, the "less-than-truckload" niche in which Yellow plays is under secular strain.
- That's likely why Rep. French Hill (R-Ark.), a former member of the CARES Act Oversight Commission, said via a spokesperson that he doesn't believe Treasury should extend or modify the maturity terms of Yellow's loan.
The bottom line: We could know the outcome by as early as tomorrow.
Editor's note: This story has been updated to reflect that the rival bid for Yellow Trucking is being led by a new entity formed by Sarah Amico which is called Next Century Logistics, not by Jack Cooper.
