Erin Jernigan 11/2/23
The wheels of change keep turning in the trucking industry as Yellow Corp’s liquidation continues. It’s not just any liquidation; this is the grand farewell, the largest sale of rolling stock in trucking history! Picture it as an epic auction, where trucks and trailers take center stage.
Yellow Corp, once a big name in the trucking world, filed for bankruptcy on August 6. This move marked the end of an era for the 13th-largest trucking company in the nation, and the third-largest less-than-truckload (LTL) operator.
Now, the bankruptcy court in Delaware has given the green light to the administrators. They’re all set to team up with some skilled auctioneers: Ritchie Bros. Auctioneers, IronPlanet Canada Ltd., and Nations Capital. These auction pros will work their magic to sell Yellow’s rolling stock.
Yellow owned quite the collection – around 12,700 tractors and 42,000 trailers. Additionally, these aren’t just any trucks and trailers; they come in various shapes, sizes, and ages. Moreover, among them, you’ll find a group of 2,000 relatively fresh tractors, which were purchased with $400 million from a $700 million loan given by the Department of the Treasury back in 2020. Given these circumstances, the big question now is how much of that money, if any, will find its way back to the U.S. government.
But the rest of Yellow’s fleet has seen its fair share of road. It’s older than your average truck in the industry and might need a little extra love and attention.
Now, here’s the exciting part – the court has laid down some ground rules for the auction process, including details about the commissions earned by the auction houses. If the auction for Yellow’s rolling stock sells it for less than $475 million, the commission rate will be 9.25%. If the sale amount falls between $475 million and $600 million, the commission increases to 10%. When the sale reaches $600 million to $800 million, the commission rises to 12.5%. Anything beyond $800 million, and it’s a 15.5% fee for the auction houses.
Yellow has another date marked on its calendar. Bids for its 169 company-owned terminals and other non-trucking assets are due by November 9. The grand terminal auction is set for November 28, and it’s already shaping up to be a contest of giants. Estes Express Lines, the fifth-largest LTL carrier in the nation, came in with a winning “stalking horse” bid of $1.525 billion for the terminals. That slightly outpaced the bid from Old Dominion Freight Line, which came in at $1.5 billion.
But the plot thickens with another twist. Jack Cooper Transport, a car-hauling company with 4,000 trucks based in Baltimore, is trying its luck with a bold bid to buy Yellow Corp out of bankruptcy. It’s a bit of a long shot, though, and their success relies on a few factors. The key player here is the U.S. Treasury, holding $700 million in loans, which are due in September 2024. Jack Cooper’s plan hinges on an extension of this payback period to 2026, which would make their offer more attractive and less demanding for Yellow.
It’s a cliffhanger, and we’ll have to wait to see if the government is ready for another trucking adventure, especially with its 30% stake in Yellow. So, stay tuned for the next chapter in this historic tale of wheels, deals, and the road ahead.