Yellow’s top 30 unsecured creditors may see little or no money

Yellow’s top 30 unsecured creditors may see little or no money

August 17, 2023

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Yellow owes more than $25 million dollars to shippers, suppliers, vendors and its own transport partners, bankruptcy case documents reveal.

The company’s list of top 30 unsecured creditors features several well-known companies, such as railroads BNSF and Union Pacific, customers Home Depot and Amazon, as well as equipment suppliers like Goodyear, Michelin and Daimler Trucks North America. Labor unions also are among the unsecured creditors, but what they might be entitled to was not initially listed.

The trucking firm publicly revealed the list of creditors on Aug. 6 as part of its ongoing bankruptcy proceedings, which will determine how much debt — if any — Yellow’s business partners will see repaid.

Unsecured creditors should expect little to no money as part of the bankruptcy proceedings, Jonathan Phares, assistant professor of supply chain management at Iowa State University, told Supply Chain Dive in an email.

“They may receive a fraction of what they’re owed if there’s anything left after the secured creditors get their payments,” Phares wrote.

Secured creditors include the Treasury Department, which holds $729 million on Yellow’s debt from a pandemic-era loan. The loan, which kept the carrier from bankruptcy in 2020, now promises the federal government priority in receiving the funds raised through the sale of Yellow’s assets.

“The Treasury will have first dibs on any funds from liquidation,” Phares wrote. “The rest of the creditors will receive little or nothing unless the federal government forgives some or all the debt.”

Yellow’s money problems are evident in its bankruptcy filing. Phares’ review of the court documents reveals a company that “was racking up bills and using credit to pay its suppliers.”

Many of the debts listed by the top unsecured creditors are for trades payables, which are like accounts payables, “except that Yellow gets to take advantage of early-payment discounts while being able to delay actual payment beyond normal payment terms because it didn’t have cash on hand to pay the invoices,” Phares said.

This meant Yellow was likely using trades payables or credit to cover expenses of consulting services from EXL Service Holdings, fuel services from Pilot, equipment and maintenance from Goodyear, Michelin and Direct ChassisLink.

Phares said shippers listed in filing including Amazon, Keurig Dr Pepper, Bed Bath & Beyond, and Coty, potentially are seeking reimbursement for cargo-related claims including lost, damaged, or stolen freight. He added money owed to other carriers may have resulted from Yellow’s use of purchased transportation.

Supply Chain Dive emailed 17 of the organizations listed among the unsecured creditors to ask about the nature of the claims. Many did not immediately reply to a request for comment.

A representative for Penske declined to comment. A Union Pacific spokesperson did not address the issue but wrote the railroad “continues to focus on working with our less-than-truckload customers, delivering on the value that we provide.”

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