The International Brotherhood of Teamsters has called for changes to U.S. Bankruptcy laws in response to the Chapter 11 filing of Yellow Corp (YELL.O), a freight trucking company. The union expressed concern that workers should not be left behind when large businesses fail. Despite making significant concessions on wages and pension benefits, 22,000 Teamsters members are now out of work due to Yellow’s bankruptcy. Yellow has attributed its collapse to the Teamsters’ opposition to its internal reorganization efforts, but the union argues that its members have already sacrificed over $5 billion in wage and benefit concessions since 2009 to support the company. The union is concerned that the bankruptcy may result in the loss of bargained-for retirement benefits and severance pay for its members. Teamsters General President Sean O’Brien criticized the current corporate bankruptcy legislation in the U.S., stating that hardworking people are often neglected in the process. Yellow has not yet responded to the union’s concerns.
The Teamsters union is advocating for reforms to U.S. bankruptcy law to protect Collective Bargaining Agreements and worker retirement plans. These agreements and plans can be terminated by a bankrupt company or a new buyer who acquires a company out of bankruptcy. The union highlighted a piece of legislation introduced in 2020 by Senator Dick Durbin and Representative Jerry Nadler as an example of the type of legislation it would support. The Protecting Employees and Retirees in Business Bankruptcies Act aimed to prioritize payment for certain employee wage and retirement claims and make it more challenging for bankrupt employers to terminate pension plans and collective bargaining agreements. Although the bill passed a House committee, it was not enacted into law. Currently, U.S. bankruptcy law prioritizes repayment of up to $15,150 in wages per employee. However, implementing a law that obligates debtors to honor existing collective bargaining agreements and retirement plans may conflict with other bankruptcy goals, such as providing debtors with a fresh start or ensuring equitable distribution of losses among creditors.
Yellow’s bankruptcy also poses a risk for U.S. taxpayers, as the company may be unable to repay a $700 million government loan. Yellow executives have expressed their intention to fully repay the loan, which was issued by the Trump administration in 2020. However, this will depend on the company’s ability to sell properties and approximately 12,000 trucks. The U.S. government also faces potential losses on its nearly 31% ownership stake in Yellow, which was received as additional security for the loan. Shareholders typically have the lowest priority in recovering their investments. As of late Tuesday, Yellow stock was trading at $3.08 per share, up from $2.48 at the beginning of the day.
In conclusion, the International Brotherhood of Teamsters is urging for changes to U.S. bankruptcy laws to protect workers in the event of company bankruptcies. The union is concerned about the impact of Yellow’s bankruptcy on its members, who have already made significant concessions. They argue that U.S. bankruptcy law should prioritize the protection of collective bargaining agreements and worker retirement plans. Additionally, Yellow’s bankruptcy carries potential risks for U.S. taxpayers and shareholders. The government may be responsible for a $700 million loan repayment, and shareholders may face losses.
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