A delinquency notice was issued Monday showing less-than-truckload carrier Yellow Corp. failed to make required contributions to health and welfare and pension funds for the month of June and that it is planning to withhold payments for July. The two periods total more than $50 million, according to a letter from Central States board of trustees.
Teamsters at Yellow (NASDAQ: YELL) operating companies YRC Freight and Holland that are covered under plans managed by Central States will be impacted.
The letter said health care claims incurred after Saturday would not be paid unless employees choose to “remit self-payments.” The company’s participation in the pension plan would be terminated effective Sunday if payment is not made, meaning no further accruals of pension benefits.
The letter showed Yellow was making the move “to avoid running out of cash.”
“If in the future Yellow fully pays the required contributions, pension benefits and health coverage will be reinstated retroactive to July 23, 2023,” the letter read.
A separate letter from John Murphy, co-chair of the Teamsters negotiating committee, to local unions invoked a more dire tone. In the notice he cited language from the collective bargaining agreement, outlining a potential work stoppage.
“In the event an Employer is delinquent in its health & welfare or pension payments in the manner required by the applicable Supplemental Agreement, the Local Union shall have the right to take whatever action it deems necessary until such delinquent payments are made.”
The document referenced the union’s requirement to give an employer 72 hours’ notice of a strike authorization. Murphy advised the local unions to send notice to YRC Freight and Holland demanding payment by Friday or risk a work stoppage on or after July 24.
Yellow previously asked the funds for contribution deferrals for the months of July and August, but the company never indicated whether or not those requests had been approved.
Roughly half of Yellow’s Teamster employees are covered by Central States.
Last week, Yellow was granted a covenant waiver from lenders. The company’s lending agreements require it to maintain a level of $200 million in earnings before interest, taxes, depreciation and amortization for the prior 12 months. Yellow had generated just $89 million in the fourth and first quarters.
That filing also showed the company had in excess of $100 million in cash and equivalents as of June 30.
“Even if these payments are cured, it would significantly reduce the company’s cash balance,” Deutsche Bank (NYSE: DB) analyst Amit Mehrotra told clients in an email late Monday evening. “This is perhaps the most tangible example of why we think it’s more likely than not YELL will go out of business, as we’ve said before.”
“We are aware of the decision of Central States Health Fund and Pension Funds to decline our request to defer contributions (with interest) for July and August,” a spokesperson with Yellow told FreightWaves. “We regret that the funds have rejected our request.
“Even today, we remain committed to negotiating a new contract with the IBT [International Brotherhood of Teamsters], which would provide everyone, especially our employees, with a clear path forward. We are not giving up. We will work with all parties involved to come to a speedy resolution.”
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truth hurts
Mr. Mnuchin then sent an email to Mr. Meadows that included news reports praising the loan. He highlighted positive comments from James P. Hoffa, the longtime president of the Teamsters union, who according to documents in the report made a direct plea to President Donald J. Trump about the loan.
Mr. Esper and Mr. Mnuchin declined to comment. GO MAGA!! YOU VOTED FOR IQ45 TWICE enjoy you bad decision.
RL
One of two things are happening here,
1) Complete an utter incompetence from the top down of corporate fiduciary management.
2) Thievery has been committed and the union chiefs are stacking cash in their offshore accounts
NO OTHER EXPLANATION CAN BE MADE FOR BLOWING THROUGH $700 MILLION (of Tax Payers Money, by the way) IN 3 YEARS …….. PRISON OR EXECUTIONS ARE IN ORDER
Frederick glawe
It was at one time if you did not work your last day for an active pension fund contributor you did not get a pension. Does anyone know if that rule still applies ?
It's very simple
If they can’t make their payments they should go into bankruptcy. I don’t understand this whole we’re gonna not pay our pension and keep running. It’s a debt, just like any other debt. If they owed the bank $50M past due, the bank sure as hell isn’t letting continue operating as if nothing happened. The workers should all stop working, they’re owed money past due. And then the company can pay their $50M out of the cash they literally have and close up shop if it’s not profitable for them to continue.
It’s really not complicated at all, it’s just that when the mega rich don’t pay, they use politicians to let them keep not paying. If I fall behind a month on my car note, they send over a big dude with a truck to take the car back. There’s nothing wrong with the rules of the system, the problem is we just decide it’s okay for people who have tons of money and will never worry about feeding their children and grandchildren to give excuses instead of giving up their second vacation home. But the rest of us can sleep on the street if we make a financial mistake.