Yellow Corp.'s ongoing bankruptcy proceeding found its way to Capitol Hill Tuesday.
Sen. Amy Klobuchar (D-Minn.), during a special Senate Judiciary Committee hearing on corporate manipulation of Chapter 11 bankruptcy, highlighted Yellow's fast-paced proceedings, a speed which she inferred comes at the expense of the carrier's former employees.
“After a company files for Chapter 11, as we all know, employees risk losing their livelihoods, health benefits [and] pensions through no fault of their own. These are things that workers have worked hard for and have earned,” Sen. Klobuchar said during the hearing. “This issue has become relevant in a big way to my state because just last month, Yellow Corp., one of the largest LTL carriers in the country, filed for bankruptcy. This bankruptcy jeopardizes the livelihood and health benefits of many hardworking Minnesotans, including 480 Minnesota Teamsters.”
Speaking before the committee and addressing Klobuchar specifically, Melissa Jacoby, the Graham Kenan Professor of Law at the University of North Carolina at Chapel Hill, where she teaches bankruptcy law, contract law, and commercial law, noted that the original intent of Chapter 11 proceedings was to allow companies to restructure in order to provide worker protections and save jobs.
"One thing that I worry about is that workers can be used as justification to ask for things that aren't actually in the bankruptcy code," said Jacoby, "that this quick sale will save jobs. That agreeing to a loan at a very high interest rate will save jobs, and yet there's often no guarantee. I think there should be more examination of jobs and the quality of those jobs in that kind of scenario, and we need to look at employment as well as the union context."
Yellow was not the subject of Tuesday's hearing. The meeting was called to facilitate constructive dialogue about Chapter 11 bankruptcy and several companies, including Johnson & Johnson and 3M, drew the ire of lawmakers for prior use of Chapter 11.
Once the meeting concluded, the International Brotherhood of Teamsters (IBT) on Tuesday urged the Senate to investigate Yellow Corp.'s bankruptcy proceedings, calling on Senators Dick Durbin and Bernie Sanders to hold hearings before the Senate Committee on the Judiciary and the Health, Education, Labor, and Pensions (HELP) Committee.
CCJ reached out to Yellow Corp. Tuesday afternoon and did not receive a response.
Yellow filed Chapter 11 bankruptcy Aug. 6, officially putting to rest weeks, if not years, of speculation of its financial demise and is six weeks into a liquidation process in which former business rivals Estes Express Lines (CCJ Top 250, No. 10) and Old Dominion Freight Line (No. 9) have submitted competing bids in excess of $1 billion each for its assets. Estes Express is currently the leader with a $1.525 billion bid for 169 Yellow terminals, according to court records.
Much of those proceeds will go to cover Yellow's outstanding debt of more than $2.5 billion, and the Teamsters claim the express nature of the process to date has all but eliminated any chance those jobs can be salvaged by any party that would want to acquire Yellow's assets and re-establish operation.
Teamsters, since 2009, claim to have given back more than $5 billion in wages and benefits to Yellow in an attempt to keep the carrier solvent. Yet, ultimately, IBT's stonewall of Yellow's attempt to re-make itself into a lean "super-regional carrier" this year was the undoing of both parties. Yellow's Teamster membership made up about half of the IBT's LTL membership.
“Yellow is trying to fast track liquidation. Meanwhile, more than 22,000 union workers are out of work after sacrificing more than $5 billion over the past 14 years through wage and benefit concessions, a fact the company would prefer to conceal from the American public and the bankruptcy courts,” said Teamsters General Secretary-Treasurer Fred Zuckerman. “We haven't had bankruptcy reform in this country for nearly two decades. We need to take this opportunity to right the wrongs at Yellow and prevent them from happening again.”
Yellow in June filed a $137 million lawsuit against the IBT, saying its ongoing delay of Yellow's business overhaul has cost the company at least that much. The carrier continues to pursue the suit. Yellow, in announcing its bankruptcy filing, cited the inflexibility of the union as a key contributor to its financial strife.