Could somebody explain????

Discussion in 'The Drivers Lounge' started by T800DRIVER, Nov 17, 2013.

  1. T800DRIVER

    T800DRIVER Member

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    If YRC goes bankrupt, Why can`t they continue to stay in business while they regroup?
    One company that comes to mind is American Airlines, Didn`t they file bankrupty several years ago and keep flying?
    Thanks John
     
  2. RacerX69

    RacerX69 Retired Gear Jammer/IBEW Retired/Wingnut

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    It depends on the type of bankruptcy they have filed, and the state where they are headquartered and have filed the bankruptcy, and several other factors that have led to the point where the company must take this step. Bankruptcy is one of the most complex areas of law, incorporating elements of contract law, corporate law, tax law and real estate law.

    A Chapter 11 works like this:

    If a court feels there has been fraud or gross mismanagement then it may appoint a trustee to handle the reorganization.

    A Chapter 7 goes this way:

     
  3. DayliteDean

    DayliteDean Super Moderator Staff Member

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    The problem with declaring bankruptcy in the freight business,is shipper confidence;Most shippers simply will stop using that carrier,many shippers have bad memories of carriers that shut the doors unexpectedly shortly after deregulation some of these closures tied up enroute shipments for weeks and sometimes months causing the shipper to either lose that customer,or re- ship an identical product at significant cost,or even as happened to some shippers they were dragged into court by the court appointed trustee to find they were being sued for the difference between off-tariff discounts the shipper negotiated with the carrier at a very significant expence.In my 30+years in this industry I can't recall even one freight hauler that successfully emerged from bankruptcy...
     
  4. sharpshooter

    sharpshooter Well-Known Member

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    What is the debt even for??

    Remember the whole argument with GM, was that suppliers wouldn't get paid but, with YRC, it sounds like all the debt is with the bank? For what exactly, who knows? If the bank was just financing operating losses, then I guess the banks are partly to blame really...like giving a drug addict more drugs
     
  5. Airbrakes

    Airbrakes Super trucker

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    YRC filed chapter 7, which means they threw in the towel and gave in to their debtors. There are a few guidelines to chapter 7, such as:

    The company must be flat out broke. As in there's no chance of a profit. You cannot afford to pay off your debt, so you in turn sell the company and assets to the debtors.

    Then you have chapter 11, which is similar to chapter 13. Chapter 11 is for businesses while chapter 13 is for individuals. Both operate under the same concepts.

    With chapter 11/13, you plan on paying off your debt, but your debt to income level is unmanageable. Instead of dealing with individual debtors, you're putting everyone in the same pot, and paying a small piece at a time. When the bankruptcy matures, the debt is expunged regardless of what amount is left. American Airlines filed chapter 11.
     
  6. pilot87

    pilot87 Well-Known Member

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    Another factor to consider is, in the unlikely event of being able to remain operating during a bankruptcy, The Bankruptcy judge would almost be certain to grant any request by the Management to void the contract....throw out any pension obligations and lower wages to whatever level they wanted...you would also most likely result in the loss of Insurance benefits as well.....For those that think that working conditions are "bad" now.....It will be, without doubt, far worse after a chapter 11.....

    However, as noted by other posters, it's not likely that they would file a Chapter 11 reorganization....Most probably it would be a chapter 7 at this point...and that means Closure..

    I would not gamble that allowing the Company to go bankrupt would result in it staying in operation.....as Mr DaylightDean pointed out, I also can't recall any Unionized LTL carrier ever surviving a Bankruptcy.....

    Mr Sharpshoter, As far as the Debt goes for YRCF, I think that by and large most of it is Bank Debt.....Lenders providing operating cash....also another debt to consider is the deferred pension payments to the Union....Yes I know they were granted a suspension of payments...but prior to that I believe there were some that were deferred...
    The Banks have actually been beneficial to the Employees of YRCF as they have kept the Company open the last few years...I think that they have so much money into YRCF at this point in time that they feel that any hope of getting any of it back is best realized by keeping the Company going...finding ways to return it to profitability....The weak economy has actually benefited YRCF in the manner that if the Economy was stronger.....and they still persisted in losses, the Lenders would have "cut and run" long ago...

    Bankruptcy and "shutting the doors" is not a good option for anyone concerned....The Employees should think long and hard at what they have...and compare that with what they will get in the event of a bankruptcy and subsequent closure.....For those that are unhappy with the present concessions....I would surmise that they are going to be ever more so unhappy if YRCF collapses....

    I realize that at some point...it would make sense to say just let it sink.....but it has not reached that point yet...in my view....
     
  7. bigbird42368

    bigbird42368 Super Moderator Staff Member

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    so, if Ch 7, does Holland and New Penn go under too?
     
  8. ABFer

    ABFer Super Moderator Staff Member

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    A lot of the YRC debt is due to monies borrowed to buy subsidiaries like Roadway, which already owned New Penn, and whatever it is that they own of TNT/Red Star, which includes Holland and some others (I am not sure what all goes along with that or what is no longer part of it). Right now it is basically an interest only loan with a hunk of principal being due to be paid soon, like in January. YRC can barely pay its day to day operations let alone interest and/or principal. As long as YRC operates at least those banks get some money regardless of how little.
    What would happen to New Penn or Holland et al only time will tell. Maybe auctioned off the highest bidder in bankruptcy auction. I don't think much, if any, of their real estate is owned anymore and juggling a bankruptcy while keeping them afloat during an auction would be tricky. Like DaylightDean said, not too many shippers would put their freight in jeopardy on their trucks like that.
     
  9. sharpshooter

    sharpshooter Well-Known Member

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    Hard to say what shippers look at anymore...it certainly isn't CSA scores. Even a big place like FX uses some of the worst CSA carriers for purchase trans. Makes me wonder how many even look at financials
     
  10. pilot87

    pilot87 Well-Known Member

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    It might be possible that those Companies could be "spun off" before any Closure of YRCF...again that could only be done with the approval of the Lenders.......I guess it would depend on the exact nature of the legal relationship between YRCF and those Companies...

    I'm just speculating at possibilities.... But that is a great question to consider...

    They all are subject to the current concessions, so I would guess that their continued operation would be in serious jeopardy as well..
     
  11. RacerX69

    RacerX69 Retired Gear Jammer/IBEW Retired/Wingnut

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    A freight carrier buys all of the rolling stock it "owns" on credit, so there is a continual debt there. Even if they lease tractors and trailers there is a steady debt load.

    And consider the fuel bill every day. Say a truck uses 200 gallons of fuel each day. 200 gallons at an average cost of $3.80 a gallon is $760. Multiply that by 10,000 trucks and you get $7,600,000 in daily fuel expenses. I doubt any carrier is paying cash for fuel, especially at that daily amount, so that is also financed.

    The fuel costs alone are something that boggles the mind.

    Trucks and trailers may be well built, but still require maintenance and repairs, and that also consumes a chunk of change. Whether YRC has their own staff for maintenance and repair, farms it out, or uses a combination of in house and outsourced maintenance and repair, it still will cost a few bucks.

    Keep in mind the daily tire bill too.

    It is mentioned here that YRC likely does not own the facilities it operates out of, so there will also be monthly real estate lease expenses.

    Add to that multimillion dollar liability insurance policies on all their trucks and trailers, freight insurance, and other insurance costs.

    Don't forget the office staff, and office supplies, computers, software licensing, the list goes on.

    So you see, the daily monetary needs of any large company are such that carrying a daily debt load goes with the territory. And when management loses control of keeping the revenue income higher than the daily debt load, things get ugly in a hurry.
     
  12. mud

    mud Wonderin'

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    YRC has not filed chapter 7 bankruptcy.
     
  13. RacerX69

    RacerX69 Retired Gear Jammer/IBEW Retired/Wingnut

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    As far as I can see they have not filed bankruptcy of any kind.

    Yet.
     
  14. DCM_Doc

    DCM_Doc Well-Known Member

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    Racer, you talk like a man who has had his own truck & paid bills.
     
  15. Pup Driver

    Pup Driver Well-Known Member

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    Yeah,Yellow Transit did in the early 1950's that's when the Powell family took over Yellow and made a great trunk line out of it . Yellow has had their scrapes with success in the past .
     
  16. DCM_Doc

    DCM_Doc Well-Known Member

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    YRC doesn't own much property. The lenders took real estate for security. Property is the most valuable asset a freight line has. Used road equipment, office equipment & anything needed for daily operation isn't valuable to lenders.
     
  17. pro1driver

    pro1driver I am LAST

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    YRC has not filed for bankruptcy....



    YRC Worldwide CEO Raises Threat of Bankruptcy
     
  18. RacerX69

    RacerX69 Retired Gear Jammer/IBEW Retired/Wingnut

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    Close.

    I pay attention, and ask lots of questions.

    I wanted to have my own truck and trailer, and run for the company I have driven for since retiring from mechanic work. I talked with just about all the owner operators they have leased on, kept track of what it costs to run the company rig I am in, and (probably) pestered the daylights out of the managers in the office.

    I even have someone who is willing to buy me a new truck and trailer for a 10% return of my annual net.

    And just when I had it all ready to go the guys on the top floor decided they aren't going to put on any more solo o/o's. They have added a few more team o/o's, but I think they have even stopped that.

    There has been considerable growth in the company in the last couple of years, they have just about doubled the amount of company trucks, but they seem to have far too many brand new tractors sitting in the yard waiting on drivers, and it looks like they aren't filling those seats very quickly.
     
  19. mud

    mud Wonderin'

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    Last edited by a moderator: Nov 17, 2013
  20. sharpshooter

    sharpshooter Well-Known Member

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    Hard to imagine the guys voting to give back more after their first was squandered but, stranger things have happened.
    People always bring up Hostess but, from what I've been told, from a guy that was there (Bakers union) the Bakers took the grunt of concessions in the past, and sure, the Teamsters portion voted yes that last time, the Bakers had already had enough. That's the problem with having multiple unions connected to the same operation I guess. The smaller less powerful ones take it the worst but, in the end, it came around to bite the rest.
     

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