Yellow Declares Bankruptcy
We had written about how Yellow has been going through some turmoil lately, how there were threats of a union strike from the International Brotherhood of Teamsters (IBT) and how it was averted when Central States granted clemency for Yellow. Because the issue had to do with Yellow being unable to meet some of its promised financial obligations, it is hardly a surprise to hear that the company has officially declared itself bankrupt.
Details
The news comes from a letter sent to the IBT, in which Yellow stated it cannot hope to meet its financial obligations for health insurance and promised pensions, and as such was closing its doors.
“Today’s news is unfortunate but not surprising,” Teamsters General President Sean M. O’Brien said in the announcement to the public. He continued in his statement by providing some particularly scathing remarks towards the now-defunct company.
“Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry.”
If the news from the IBT is true, and we have no reason to doubt that it is, then, notwithstanding a financial restructuring or some form of bailout, 30,000 employees are about to have to search for other forms of work, and the supply chain of other logistical companies are going to have to absorb their transported freight. This is not unlike what would have happened had the IBT gone on strike with Yellow, only this applies to all of Yellow’s workers and may be permanent.
Conclusion
What might be perhaps the most shocking news of all is that the news of the company going under has caused its stock price to explode upward, going from around 60 cents per share to $3 per share in a single week. Usually when a publicly-traded corporation declares bankruptcy, its stock price drops to zero as any equity in the company evaporates. The supposed reason for this upswing is hedge-fund manager MFN Partners LP purchasing almost 25% of all shares in the company in a single day, perhaps interested in restructuring it after now having a 42.5% stake in the company, a plurality of the shares.
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