Amid an ongoing battle with the Teamsters union and dire financial conditions, the Congressional Oversight Commission (COC) released its final report on Yellow Corporation’s $700 million national security loan from the Treasury Department that was part of COVID-19 relief funding. The COC was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and was tasked with overseeing how the Treasury and the Board of Governors of the Federal Reserve System utilized specific taxpayer funds to provide economic stability as a result of the COVID-19 pandemic.
Yellow (CCJ Top 250, No. 6), operating as YRC Worldwide at the time, received the loan because it was designated as a “business critical to maintaining national security” due to its work with the Department of Defense. The loan came in exchange for nearly 30% ownership stake of YRC by the U.S. government.
The COC said it expressed concerns over the loan in a report dated July 20, 2020, just weeks after the loan was announced.
“That report raised concerns with the Treasury’s decision to deem Yellow a business critical to maintaining national security and the process for reaching that conclusion,” COC said in its final report. “The Commission noted that it is far from clear that the fourth-largest LTL shipping company in the United States is critical to maintaining national defense because it reportedly delivers ‘food, electronics and other supplies to military locations around the country.’”
COC added that the report also raised concerns about the riskiness of the loan due to Yellow’s poor financial condition even before the pandemic began, noting the company had been “non-investment grade for over a decade before the COVID-19 pandemic, struggled financially for years before the pandemic, and was at risk of bankruptcy before it obtained a loan from the Treasury.”
[Related: Yellow files $137 million lawsuit against Teamsters union]
Yellow, when questioned last year about the loan, didn't deny its use of the CARES Act funds to make capital investments, and instead insisted they were completely proper and in line with negotiations the firm had with the Treasury.
