A couple of years ago, Tom Kelly had thought about shutting down his independent trucking company and joining Yellow instead.
“My barber worked for Yellow for 35 years, and he always talked to me about working for them, but I just didn't do it,” said Kelly who drives in Florida and Texas.
The Yellow Trucking Company filed a petition for Chapter 11 bankruptcy this week in the U.S. Bankruptcy Court for the District of Delaware.
“It affects me mentally because I hate to see another truck driver lose his job or retirement savings,” Kelly told the Florida Record.
Yellow employed 30,000 freight professionals who were both union and non-union however the company struggled to compete with non-union companies.
In response, Yellow attempted to streamline its operations with Yellow One, a strategic restructuring initiative, however Yellow Chief Restructuring Officer Matthew Doheny accused International Brotherhood of Teamsters (IBT) General-President Sean O’Brien of refusing to allow union workers to participate in the process that was contractually mandated to change operations.
“Mr. O’Brien and the Union knowingly and intentionally triggered a death spiral for Yellow,” Doheny stated in his Aug. 7 court declaration. “Every month the Union breached its contractual obligations, Yellow lost the savings and increased revenues that One Yellow’s implementation would have provided. Each day the Union blocked the successful completion of One Yellow, Yellow got closer to running out of cash, further impairing its ability to refinance its $1.2 billion in debt that matures in 2024 or 2026, as applicable.”
IBT did not respond to requests for comment.
On June 27, 2023, Yellow sued the IBT, its negotiating committee, and several local unions in the U.S. District Court for the District of Kansas, alleging that the parties had breached the collective bargaining agreement. The lawsuit seeks $137 million in damages for the Union’s obstruction.
“We faced nine months of union intransigence, bullying and deliberately destructive tactics,” said Darren Hawkins, Yellow’s Chief Executive Officer, in a statement. “A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
In its petition, Yellow listed more than 100,000 creditors, up to $10 billion in assets and up to $10 billion in liabilities.
“When we've looked into it, there was a tremendous trucker shortage and there continues to be a trucker shortage and there's energy costs that have hit trucking and, particularly in Florida, they've had some really extreme litigation issues as well,” said Bill Herrle, executive director of Florida's National Federation of Independent Business (NFIB).