Court Approves Yellow Administrators’ Auction Plans
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A court on Oct. 27 approved plans by the administrators of bankrupt less-than-truckload carrier Yellow Corp. to use auctioneers to sell the company’s rolling stock, just days before a report emerged that auto hauler Jack Cooper Transport is eyeing a possible long-shot bid to rescue the motor carrier.
Ritchie Bros. Auctioneers and restructuring experts at Nations Capital on Nov. 2 announced they had received court approval to start planning and marketing the sale of the trucks and trailers owned by Yellow, which ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. Yellow owned around 12,700 tractors and 42,000 trailers at the end of the second quarter, according to company documents. Yellow filed for bankruptcy protection Aug. 6.
The asset sale would be the largest single liquidation of rolling stock the U.S. trucking industry has seen. “We are honored to provide Yellow Corporation a comprehensive solution to maximize the value of its rolling stock assets,” NCI Executive Vice President Jim Burke said. “The historic size and complexity of this transaction required a highly coordinated effort between the teams at NCI, Ritchie Bros. and the company. Together with Ritchie Bros., we are prepared to lead one of the largest disposition events in our industry.”
That announcement came after reports of a long-shot effort from auto hauler Jack Cooper Transport to rescue Yellow began to emerge, complete with support from members of Congress looking to save some of the 30,000 jobs lost when Yellow closed its doors.
Ritchie Bros. and restructuring experts at Nations Capital can officially start planning and marketing the sale of Yellow Corp. trucks and trailers. (Ritchie Bros.)
Jack Cooper, a 95-year-old company, provides vehicle hauling and other logistics services. Its largest customers are General Motors, Ford and Stellantis. The company is owned by the Riggs family, which acquired it from Jack Cooper’s grandson, Thom Cooper, Jr. Sarah Riggs Amico is executive chair of the company’s board. Her father, T. Michael Riggs, is CEO.
According to an Oct. 30 Reuters report, Jack Cooper has asked the Biden administration to support the deal. Critical to that support is the handling of debt that Jack Cooper would inherit from Yellow. The deal is valued at roughly $2 billion, Reuters reported.
The immediate cause of Yellow’s breakdown was seen as its inability to refinance $1.3 billion in debt, which included a $700 million pandemic-assistance loan it received from the federal government in 2020. The loan is due next September.
To make the proposed deal more attractive, Jack Cooper is reportedly asking that the U.S. Department of the Treasury extend the deadline for repaying that loan until 2026.
Jack Cooper Holdings ranks No. 75 on the for-hire TT 100.
Two letters from U.S. senators have been sent to Treasury Secretary Janet Yellen, arguing that a two-year extension is a smart move both for taxpayers and the overall economy.
“If this loan were to go through bankruptcy, $700 million worth of taxpayer dollars would be essentially wasted,” wrote Sen. Roger Marshall (R-Kan.). The purchase “would provide an ample opportunity to have this loan repaid and the taxpayers made whole again.”
Another letter signed by Sen. Sherrod Brown (D-Ohio) also endorsed the deal as a way to pay off Yellow’s creditors and taxpayers while preserving union jobs.
Should the equipment auctions proceed, the auctioneers would be in charge of refurbishing Yellow’s trucks and trailers. Some 2,000 tractors purchased with $400 million from the $700 million loan are newer and will need less refurbishing. However, much of the rest of Yellow’s fleet was older than industry average, according to sources, and could need more work.
Jack Cooper Transport is attempting to make a bid to buy Yellow Corp., according to Reuters. (Jack Cooper Holdings Corp.)
Beyond the rolling stock, a Nov. 9 bid deadline was set by Yellow for selling the company’s 169 terminals and other non-rolling stock assets. An auction will then be held Nov. 28, if necessary, and the names of the winning bidders and backup bidders will be revealed Dec. 1.
Estes Express Lines is the stalking horse bidder for the terminals — Yellow’s most valuable assets. Richmond, Va.-based Estes offered $1.525 billion.
A stalking horse bid is an initial offer on the assets of a bankrupt company that sets a bar that means others cannot make lower bids.
Old Dominion Freight Line previously offered $1.5 billion to acquire the terminals Aug. 18, topping a $1.3 billion Estes Express bid Aug. 17.
Estes Express ranks No. 14, and Thomasville, N.C.-based ODFL ranks No. 10 on the for-hire TT 100. ODFL is No. 2 in the LTL rankings, and Estes Express is No. 5.
With additional reporting by Tribune Content Agency, LLC
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