The anticipated bankruptcy of trucking giant Yellow Corp. stands to have a major impact on collective bargaining agreements that cover roughly 22,000 workers, offering a chance to test when union contracts can survive insolvency proceedings.
Bankruptcy law contains provisions that arguably give unions more leverage to fight to keep their contracts in place as the company decides how to pay creditors, reorganize, or wind-down. Businesses, for example, generally face a higher bar to reject a bargaining agreement during a Chapter 11 proceeding than some other types of contracts.
Those measures will likely come into play between Yellow and the Teamsters, which represents a large swath of the company’s 30,000 workers. The union threatened to go on strike last month after the company initially failed to make a $50 million payment for employee benefits.
On Monday, the union said it was served with a legal notice that the Nashville, Tenn.-based company is ceasing operations and liquidating.
Teamsters General President Sean M. O’Brien called the news “unfortunate but not surprising.”
“Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government,” O’Brien said.