Teamsters union calls for US bankruptcy reform after Yellow’s collapse.

Teamsters union calls for US bankruptcy reform after Yellow's collapse.

Protecting Workers and Reevaluating Bankruptcy Laws: The Yellow Corp Case

Yellow Corp

Standing Up for Workers

The International Brotherhood of Teamsters has recently called for changes to U.S. bankruptcy laws in the wake of the Chapter 11 filing by Yellow Corp. This trucking company, with a history close to a century, faced financial difficulties leading to bankruptcy. The Teamsters union, representing 22,000 members working for Yellow, expressed their concerns that workers should not be left behind when large corporations fail.

Despite making significant concessions on wages and pension benefits during labor negotiations, the Teamsters saw their members out of work as a result of the bankruptcy filing. Yellow Corp attributed its collapse in part to the Teamsters’ resistance to internal reorganization efforts. However, the union emphasized that its members had already made over $5 billion in wage and benefit concessions since 2009 to support the survival of Yellow Corp.

With the bankruptcy filing, there is now a potential risk that the workers may not receive the retirement benefits and severance pay they were promised. The Teamsters’ General President, Sean O’Brien, strongly criticized the current state of U.S. corporate bankruptcy legislation. He stated, “Hardworking people routinely get left behind in this process when they should be at the front of the line to be paid and protected for the sacrifices they make to American employers.”

A Call for Reformed Legislation

To address these issues and protect workers’ rights in bankruptcy situations, the Teamsters union urged the need for reforms to U.S. bankruptcy law. They specifically emphasized the importance of upholding collective bargaining agreements and worker retirement plans, which can be terminated by bankrupt companies or new buyers acquiring companies out of bankruptcy.

The Teamsters singled out the “Protecting Employees and Retirees in Business Bankruptcies Act,” introduced in 2020 by Democratic Senator Dick Durbin of Illinois and Representative Jerry Nadler of New York. This bill aimed to prioritize payment for certain employee wage and retirement claims while also making it more challenging for bankrupt employers to terminate pension plans and collective bargaining agreements.

Although the bill passed a House committee, it did not become law. Currently, U.S. bankruptcy law prioritizes repayment of up to $15,150 in wages per employee. George Singer, a bankruptcy attorney not involved in Yellow Corp’s case, acknowledged this limitation while suggesting that legislation guaranteeing the honoring of existing collective bargaining agreements and retirement plans may conflict with other fundamental bankruptcy goals.

Implications for Workers and Taxpayers

Beyond the immediate impact on workers, Yellow Corp’s bankruptcy also poses risks for U.S. taxpayers. In the event that the company is unable to repay a $700 million government loan, taxpayers may bear the burden. Yellow Corp executives have expressed their intent to fully repay the loan issued by former President Donald Trump’s administration in 2020. However, the company’s ability to meet this obligation depends on successfully selling properties and approximately 12,000 trucks.

Furthermore, the U.S. government, holding nearly a 31% ownership stake in Yellow Corp, also faces potential losses. This stake was received as additional security for the loan and, in typical bankruptcies, shareholders are generally the last to recover their investments. Unity and collective action are vital to protect the interests of workers and ensure that they are not unfairly affected by bankruptcy proceedings.

As of late Tuesday, Yellow Corp’s stock was trading at $3.08 per share, up from $2.48 earlier in the day. While this may provide some hope, the overall situation remains precarious for both workers and the broader economy.

In conclusion, the plight of Yellow Corp and the Teamsters union sheds light on the challenges workers face when large corporations file for bankruptcy. The current bankruptcy laws in the U.S. may fail to adequately protect employees, their wages, collective bargaining agreements, and retirement plans. Reforms, similar to the proposed Protecting Employees and Retirees in Business Bankruptcies Act, could potentially address these issues. It is essential for lawmakers to acknowledge the sacrifices made by workers and reconsider the framework within which bankruptcy is handled to ensure a more just and equitable system for all parties involved.