Yellow Corp. box trailers sit at a terminal on June 28, 2023 in Medley, Florida.
Joe Raedle | Getty Images
Bankruptcy-bound trucking firm Yellow received a whopping $700 million in Covid pandemic relief loans three years ago after Trump administration officials pushed for it despite objections from the Defense Department.
Yellow has repaid just $230 out of the $729.2 million in principal it still owes the U.S. Treasury for those loans, in response to a government watchdog’s report in May. That single payment was made in June 2021.
The Teamsters Union, which represents Yellow staff, blasted the freight carrier in an announcement Sunday and highlighted the Covid loans.
“Yellow has historically proven that it couldn’t manage itself despite billions of dollars in employee concessions and lots of of thousands and thousands in bailout funding from the federal government,” Teamsters General President Sean M O’Brien said.
Yellow told staff on Friday that it is totally shutting down, which might put 30,000 staff out of their jobs, and the Teamsters said the corporate plans to file for bankruptcy.
When it does, it’s going to grow to be the biggest bankruptcy ever for a trucking firm.
A Yellow spokesman didn’t immediately reply to a request for comment from CNBC.
The Trump administration in July 2020 approved the $700 million in loans to then-financially troubled Yellow, formerly referred to as YRC Worldwide, under the so-called CARES Act, which authorized such for firms “critical to maintaining national security.”
On the time the loans were made, they represented 95% of the full funds disbursed under the CARES Act. The federal government received an almost 30% stake in Yellow in exchange for the loans.
A House subcommittee in April 2022 issued a scathing report on the loans, saying they were prolonged to the corporate despite the assessment by Defense Department officials that the corporate was not “critical” to national security.
The report said, “The loan’s approval involved the intervention of top Trump Administration officials —potentially including the president,” Donald Trump.
In accordance with the report, documents show that Trump White House chief of staff Mark Meadows planned to call Treasury Secretary Steven Mnuchin about Yellow’s request for the loans in May 2020.
“Secretary Mnuchin’s communications confirm President Trump’s interest within the loan approval,” the subcommittee noted in an announcement concerning the report.
“The morning that Treasury announced the loan to Yellow, Secretary Mnuchin sent Chief of Staff Meadows and the president’s executive assistant a CNN article reporting on the loan and highlighted that a union leader thanked President Trump for the loan — just months before the 2020 presidential election,” the statement said.
On the time the loans were made, the Department of Justice was suing Yellow for alleged fraud related to overcharges to the Defense Department for freight carrier services. The corporate in March 2022 agreed to pay about $6.85 million to settle that lawsuit.