Yellow faces bankruptcy: Who is in line to benefit?
Todd Maiden
Tue, July 18, 2023
The Teamsters say the carrier has until Sunday to pay up. (Photo: Jim Allen/FreightWaves)
Shortly after less-than-truckload carrier Yellow Corp. said Tuesday it would go through with plans to defer required contributions to funds managed by Central States Funds, the International Brotherhood of Teamsters issued a strike notice.
The notice said a work stoppage could occur as soon as Monday.
“Yellow has failed its workers once again and continues to neglect its responsibilities,” said Sean O’Brien, Teamsters general president. “Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position.”
On Monday, Central States issued a delinquency notice to plan participants working at Yellow (NASDAQ: YELL) operating companies YRC Freight and Holland. The letter said the companies had deferred health and welfare and pension contributions due this past Saturday and would do the same for payments due August 15.
“The Company advised Central States Funds that it would defer payment of health and pension contributions for June (due July 15) and July (due August 15) to preserve liquidity as it worked to obtain meetings with the IBT [International Brotherhood of Teamsters] as well as secure additional financing,” a Tuesday evening statement from Yellow read.
The combined payments total $50 million for the two-month period.
A recent filing with the Securities and Exchange Commission showed Yellow had in excess of $100 million in cash as of June 30.
Yellow has said it will repay the amounts with interest in the future.
If unpaid, the carriers’ participation in the pension plan would be terminated on Sunday and health care claims incurred by employees after Saturday would not be paid.
Employees have the option to pay for health care out of pocket. In a separate notification, Central States said the cost is $471.86 per week through July 29. The amount increases to $507.08 per week after that. Payments must be received by August 23.
Yellow and the Teamsters have been unable to reach an agreement on operational changes that the carrier says are necessary for it to remain in business.
The Teamsters statement said the company has until Sunday to make the payment.
“Yellow has a responsibility and obligation to workers. Our members should not suffer because of management’s incompetence and financial irresponsibility,” said Fred Zuckerman, Teamsters general secretary-treasurer. “The Teamsters are working with our local unions, and we will continue to regularly update members as this situation unfolds.”
Yellow not paying — yet — even as potential strike looms
Todd Maiden
Tue, July 18, 2023
Teamsters strike could happen as soon as Monday. (Photo: Jim Allen/FreightWaves)
Less-than-truckload carrier Yellow Corp. issued a statement Tuesday evening saying it would defer its required contributions for June and July as planned, potentially resulting in a strike by some of its Teamsters workforce.
Central States Funds, which manages health and welfare and pension funds for Teamsters at Yellow (NASDAQ: YELL) operating companies YRC Freight and Holland, issued a delinquency notice to plan participants Monday evening. The notice showed the carriers’ participation in the pension plan would be terminated Sunday and health care claims incurred after Saturday would not be paid.
The letter said the company withheld the June payment and was planning to withhold the July payment. Central States estimated payments for the two periods to be more than $50 million.
A separate letter from the Teamsters on Monday advised the impacted local unions to demand payment by Friday or risk a work stoppage on or after Monday. The protocol is part of the parties’ collective bargaining agreement, which requires the union to give the employer 72 hours’ notice of a strike authorization.
“The Company advised Central States Funds that it would defer payment of health and pension contributions for June (due July 15) and July (due August 15) to preserve liquidity as it worked to obtain meetings with the IBT [International Brotherhood of Teamsters] as well as secure additional financing,” a Tuesday evening statement from Yellow read.
Yellow said the two months of deferrals would equal “approximately $50 million dollars” and reiterated that it had only deferred one of the two payments thus far.
“The company intends to repay the funds with interest immediately upon securing additional financing and has asked the funds to discuss acceptable terms,” Yellow’s statement read.
A recent filing with the Securities and Exchange Commission showed Yellow had in excess of $100 million in cash and cash equivalents as of June 30.
Plan participants have the option to pay for health insurance out of pocket, Central States advised. The health coverage costs $471.86 per week through July 29, increasing to $507.08 per week through July 2024, the notice stated. Payments must be received by Aug. 23.
Roughly half of Yellow’s Teamster employees are covered by Central States.
Asked about the likelihood of a work stoppage if the payment isn’t made, Yellow declined further comment.
Yellow and the Teamsters remain at odds over proposed operational changes, which the carrier maintains are required for its survival.
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