Bankrupt trucker Yellow repays $700 million Covid mortgage, as unsecured creditors press for billions more

By omshreeinfotech Feb 6, 2024
Bankrupt trucker Yellow repays $700 million Covid mortgage, as unsecured creditors press for billions more

Trucks and trailers sit in a Yellow Corp. facility lot, closed after the freight trucking firm ceased all operations, in Las Vegas, Nevada, on July 31, 2023. 

Patrick T. Fallon | AFP | Getty Images

The bankrupt trucking firm Yellow has totally repaid a controversial $700 million Covid loan to the U.S. Treasury Department, plus more than $151 million in curiosity, the corporate mentioned Monday.

The announcement got here almost two months after a federal chapter choose in Delaware accepted Yellow’s request to promote most of its delivery facilities and actual property for almost $1.9 billion.

Meanwhile, unsecured creditors within the chapter case, together with worker pension funds, are in search of billions of {dollars} in payouts from what stays of the corporate.

The $1.3 billion in debt that Yellow had coming due this 12 months included the $700 million mortgage it acquired in 2020 below the CARES Act, which licensed the Treasury Department to make loans to corporations that have been “essential to sustaining nationwide safety” in the course of the Covid-19 pandemic.

Top Trump administration officers pushed Treasury officers to approve the mortgage over the objections of the Defense Department, which decided that Yellow was not “essential to sustaining nationwide safety.”

By mid-2023, as it headed towards chapter, Yellow had made just one fee on the mortgage: $230, in July 2021.

In an announcement Monday saying the mortgage compensation, Yellow’s chief restructuring officer Matthew Doheny mentioned, “compensation demonstrates Yellow’s absolute dedication to fulfilling its promise to the American taxpayers that its CARES Act mortgage can be repaid in full with curiosity.”

In an obvious nod to the controversy over the mortgage, Doheny mentioned that “regardless of receiving bipartisan help, Yellow’s CARES Act mortgage wouldn’t have been attainable with out the management of President [Donald] Trump and [Treasury] Secretary [Steven] Mnuchin for which Yellow is and stays grateful.” 

Read more CNBC politics protection

Yellow’s administration has blamed the Teamsters labor union for a liquidity disaster final 12 months, because of the union’s refusal to defer advantages funds the corporate owed final 12 months to the Central States Pension Fund. The union had threatened to strike in July if the fee was not made.

Teamsters General President Sean O’Brien in August mentioned, “Yellow’s dysfunctional, grasping C-suite did not take duty for squandering all that money. They nonetheless do not.”

“They shamelessly pin their company incompetence on working individuals,” O’Brien mentioned.

Yellow’s lawyer Mark Kaskowitz in an announcement Monday once more blamed the International Brotherhood of Teams management, below O’Brien, for taking a “militant zero-sum strategy to coping with Yellow that prevented Yellow from finishing its community optimization.”

CNBC has requested remark from the Teamsters on Kaskowitz’s assertion.

Central States and different pension funds are among the many unsecured creditors in search of billions of {dollars} within the Yellow chapter case.

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