Bankrupt Yellow Corp. said it repaid the $700 million COVID-relief loan it received from the U.S. Treasury in 2020. In addition to the principal amount, it repaid more than $151 million in interest, a late Monday statement read.
The controversial loan was viewed as an unwarranted bailout by some and outside the scope of the CARES Act, which established a lending program to help companies fund near-term liquidity needs associated with lost business from COVID-related lockdowns.
The defunct less-than-truckload carrier qualified for the loan on a carveout provision, allowing companies “critical to maintaining national security” to participate. Shortly after the loan was made, lawmakers and the Treasury and Defense departments squabbled over which party was ultimately responsible for blessing the transaction.
A congressional oversight commission would conclude in 2023 that the loan to Yellow (YRC Worldwide at the time) should not have been made and that it brought undue credit risk to taxpayers.
It was the $400 million second tranche of the loan package that drew the ire of some officials. The first $300 million was set aside for the company to catch up on delinquent pension and health care payments to its Teamsters workforce. However, the second portion of the loan allowed the company to make capital investments by replacing older tractors and trailers.
Treasury did receive a 29.6% equity stake in Yellow, which is currently worth more than $60 million, as part of the collateral agreement.
“This repayment demonstrates Yellow’s absolute commitment to fulfilling its promise to the American taxpayers that its CARES Act loan would be repaid in full with interest,” said Matthew Doheny, Yellow’s chief restructuring officer, who is tasked with unwinding the company’s assets through a Chapter 11 proceeding.
The estate recently auctioned off 153 owned and leased terminals, roughly half of the company’s real estate portfolio, for $2 billion. Most of the buyers were former Yellow competitors.
A Delaware bankruptcy court is overseeing the liquidation, which also includes the sale of 12,000 tractors and 35,000 trailers. That process remains ongoing.
Roughly $900 million in other secured debt and debtor-in-possession financing remains outstanding.
The estate will also have to address numerous unsecured claims, including potential withdrawal liabilities from multiemployer pension funds, penalties for potential WARN Act violations and more than 200 personal injury claims, among other items.
The company said it is still pursuing a $137 million breach of contract lawsuit against Teamsters for blocking proposed changes to modernize how the carrier operates.
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