Yellow Corporation Files Voluntary Chapter 11 Petitions

Goodmans LLP is acting as Canadian counsel for Yellow Corporation and its subsidiaries (collectively, the “Debtors”) in connection with their ongoing recognition proceedings (the “Recognition Proceedings”) under Part IV of the Companies’ Creditors Arrangement Act (the “CCAA”) in respect of their Chapter 11 bankruptcy proceedings.

The Debtors form an approximately 100-year-old trucking and logistics company (“Yellow” or the “Company”), which boasted one of the largest less-than-truckload (“LTL”) networks in North America that enabled Yellow to provide customers with regional, national, and international shipping services of transportation logistics and LTL services. Entering 2023, Yellow was the largest unionized LTL carrier in the United States, in addition to being the third largest LTL freight carrier and the fifth largest transportation company in North America. Yellow Corporation traded on the NASDAQ.

Throughout 2023, Yellow had been facing a severe liquidity crisis over an extended period, resulting in large part due to the International Brotherhood of Teamsters (the “Union”) blocking Yellow’s multi-phase strategic initiative, termed “One Yellow”, that was intended to modernize Yellow’s business and upgrade the efficiency of its operations. The Union refused the Company’s proposals in connection with implementing the One Yellow initiative, which significantly impaired the Company’s liquidity and ability to refinance its approximately US$1.2 billion of debt.

On July 17, 2023, the Union issued a 72-hour strike notice to Yellow that was set to take effect on July 24, 2023. The strike notice, coupled with the extensive and public challenges between the Company and the Union, was devastating to the Company’s business. Among other effects, Yellow’s most loyal customers, facing the uncertainty of the threatened strike, dropped the Company as a carrier. On the day the strike was announced, Yellow’s individual shipments had totaled approximately 40,000. Four days later, Yellow’s shipments were nearly zero.

On August 6, 2023, Yellow Corporation and the other Debtors each filed petitions in the United States Bankruptcy Court for the District of Delaware (the “U.S. Bankruptcy Court”) seeking relief under chapter 11 of the United States Bankruptcy Code (the “Chapter 11 Cases”).

On August 8, 2023, the Yellow Parent, in its capacity as the proposed foreign representative in respect of the Chapter 11 Cases, brought an application before the Ontario Superior Court of Justice (Commercial List) (the “Canadian Court”) pursuant to Part IV of the CCAA and obtained a stay of proceedings in respect of Yellow Corporation and its Canadian subsidiaries, YRC Freight Canada Company, YRC Logistics Inc., USF Holland International Sales Corporation, and 1105481 Ontario Inc. (collectively, the “Canadian Debtors”).

On August 9, 2023, the U.S. Bankruptcy Court granted, among other relief, an order authorizing Yellow Corporation to act as foreign representative (the “Foreign Representative”) in respect of the Chapter 11 Cases.

On August 29, 2023, Yellow Corporation, as the Foreign Representative obtained recognition of the Chapter 11 Cases by the Canadian Court under Part IV of the CCAA.

The Debtors, including the Canadian Debtors, commenced the Chapter 11 Cases and the Recognition Proceedings to facilitate an orderly wind-down of their operations and to conduct an orderly and value-maximizing liquidation of their portfolio of real estate and trucking assets. In connection with such efforts, the Debtors have, among other things, obtained approval by the U.S. Bankruptcy Court and recognition by the Canadian Court of (1) DIP financing of up to US$312.5 million to fund, among other thing, the Debtors’ wind-down and sale process, (2) bidding procedures in respect of their rolling stock and non-rolling stock assets, (3) a stalking horse agreement for the purchase of the Debtors’ real estate portfolio for cash consideration of US$1.525 billion, and (4) an agency agreement for the sale of the Debtors’ rolling stock assets by certain liquidators.

The Debtors continue to advance their wind-down and sale efforts with a view to maximizing the value of their estates for the benefit of their stakeholders.

Deal Type

Other

Industry

Banking/Finance

Transaction

$ 2,700,000,000

Deal Status

Active

Closing Date