Yellow Corp.
Yell Truck 2

Yellow bails on equipment auction, hires liquidators

Oct. 20, 2023
Updated: Nations Capital and Ritchie Bros. have six months to clear Yellow’s terminals and until early 2025 to find buyers for about 12,000 trucks and 42,000 trailers.

Yellow Corp. executives have abandoned their plan to run an auction of the defunct company’s trucks, trailers, and forklifts in the coming weeks and are instead turning over that equipment to Nations Capital and Ritchie Bros. Auctioneers.

The leaders of Yellow, which earlier this year ranked No. 6 on the FleetOwner 500: For-Hire list, filed for bankruptcy protection in early August and had initially set Oct. 13 as the deadline to submit truck or trailer purchase bids. But they lifted that deadline late last week and didn’t lay out a new timeframe. Since the weekend, the executives and their financial advisors have sketched out some of the reasons behind their decision to move on from that plan and engage with Nations Capital, which has six offices around the country, and Ritchie Bros., one of the best-known names in the auction/liquidation business.

Cody Leung Kaldenberg, a partner at investment bank Ducera Partners, on Oct. 16 told the Delaware bankruptcy court handling Yellow’s case that she and her team had contacted about 300 potential buyers of trucks and trailers and that more than 150 of those entities had signed confidentiality agreements giving them access to Yellow’s books.

See also: Moderate expectations for Class 8 trucks and trailers

But that process apparently didn’t produce enough viable offers—particularly when considering that Yellow’s rolling stock is spread across the country and in parts of Canada at terminals and other properties the company also is looking to sell. (Estes Express Lines has been declared the so-called stalking-horse bidder in that process, having submitted a $1.525 billion offer for Yellow’s portfolio of more than 140 terminals.)

“Retention of a liquidator would provide the best path for the Debtors to maximize the value of the Rolling Stock Assets while addressing other logistical constraints such as removing the Rolling Stock Assets from the Debtors’ properties,” Kaldenberg wrote in her declaration to the court.

Also playing into the decision to bring on Nations Capital and Ritchie Bros. to sell Yellow's equipment (through both auctions and privately negotiated transactions) is that Yellow laid off nearly its entire workforce two-plus months ago. Only a skeleton crew of executives and support staff remains to handle the winding down of the company. On top of that, Kaldenberg wrote, the liquidators have agreed to relocate Yellow’s more than 12,000 trucks and roughly 42,000 trailers to their own properties—albeit over the course of the next six months—and will not charge Yellow rent to store them before finding buyers.

Per the companies’ agreement, which has the support of its main creditors and which Judge Craig T. Goldblatt approved Oct. 18, the liquidators will have up to 18 months to dispose of Yellow’s equipment. That, observers say, is necessary given the volume of trucks and trailers and the state of the market.

“The new strategy will, given the sheer volume of pieces for sale and current market conditions, require additional time to produce revenue that is not fire-sale pricing,” Holland & Hart Partner George Singer told FleetOwner. “Yellow will also obtain the benefit of marketing and disposition expertise that […] these firms possess.”

The relocation and sales time frames Yellow, Nations, and Ritchie have agreed to also acknowledge that the market for used equipment is, given the weak overall freight environment, very soft. And, said J.D. Power Director of Specialty Vehicles Chris Visser, it’s likely to get worse before it gets better.

“Our view is used-truck market conditions in general will continue to correct into the second quarter of 2024,” Visser said. “As such, any trucks sold during that period will be selling into a market somewhat cooler than current. Trucks sold in mid-2024 and later could benefit from somewhat better market conditions, but since the majority of Yellow's trucks are older and higher-mileage, that factor won't be particularly meaningful.”

Also worth noting, Visser said: Yellow’s newer trucks—the company spent nearly $520 million on revenue equipment in 2021 and 2022, most of that money coming from a CARES Act loan—shouldn’t have much trouble finding a buyer. But the company’s older day cab trucks “will be selling into a market segment already somewhat oversaturated” and will thus contribute to poor price trends even if Nations and Ritchie manage their supply.

Goldblatt has scheduled an Oct. 27 hearing to hear possible objections to the hiring of Nations Capital and Ritchie Bros.

Correction: This story has been updated to correctly identify that Nations Capital also has been hired to help liquidate the Yellow portfolio.

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