Yellow Terminals Auctioned

The story of Yellow, the trucking company that almost lasted a full century, is slowly but surely coming to an end, as many of its terminals have now been auctioned off in order to pay off its debts.

Details

In total, $1.9 billion was raised and 75% of Yellow’s land was pawned off to twenty other trucking companies. This includes:

• XPO: 130 terminals for $1.5 billion.
• Estes Express Lines: 24 terminals for $249 million.
• Saia: 17 different pieces of land for $236 million.
• Knight-Swift: 13 terminals for $51 million.

Based on the way that financial structuring works within the United States, the money is expected to go to creditors, including the United States federal government, which gave Yellow a significant CARES Act loan in 2020 to the tune of $700 million during the coronavirus pandemic. With $1.3 billion in secured debt on the company’s books, the extra $600 million will go to unsecured debt holders, such as money owed on company credit cards, though it is expected that the unsecured lenders will not be made whole as a result of auctioning off Yellow’s assets.

As Yellow employed a significant number of employees, we believe that its bankruptcy had a detrimental effect on the Bureau of Labor Statistics numbers for many months after it closed doors; a detrimental effect that may still be felt by the trucking industry to this day.

It is hard to ultimately say whether or not the other trucking companies made off like bandits as a result of the auction: with them all competing against each other, there were sure to be a lot of bids to try and secure the appropriate assets.

Conclusion

With Yellow failing, is it possible that other trucking companies will fail in the foreseeable future? We are confidently placing our chips on “no.” After all, if companies of varying sizes, from ones as large as XPO and Knight-Swift to smaller freight companies have enough financial strength to buy up almost $2 billion in properties, it speaks to the financial solvency of these organizations.

Although the auctions have been finished, the purchases of the properties and terminals from Yellow will need approval from the U.S. Bankruptcy Court in order to become reality, the verdict of which is expected to happen on December 12th. If any bombshell information arises from that date, such as the revival of Yellow from the dead, we will be sure to let you know.

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