Bankrupt LTL Sees Maximum Return From Using Auction Houses
(Sue Ogrocki/Associated Press)
The administrators of Yellow Corp. aim to use auction houses to sell off the bankrupt less-than-truckload carrier’s rolling stock, according to court filings.
Lawyers retained to dispose of the trucks and trailers want to bring in Nations Capital, Ritchie Bros. Auctioneers and IronPlanet Canada Ltd. to “act as the debtors’ exclusive marketer, broker and auctioneer of the rolling stock assets,” according to documents filed with the Bankruptcy Court for the District of Delaware.
Yellow owned around 12,700 tractors and 42,000 trailers at the end of the second quarter of 2023, according to company documents. The sale would be the largest single liquidation of rolling stock the U.S. trucking industry has seen.
Bankruptcy Judge Craig Goldblatt will decide on Oct. 23 whether to approve the proposal.
The Yellow administrators had wanted Goldblatt to decide whether to approve the plan more quickly, but the office of the U.S. Trustee, which oversees bankruptcy cases, objected.
Richard Schepacarter, representing the federal agency at an Oct. 17 hearing, argued appointment of the auctioneers “doesn’t need to be done on such quick notice” and the amount of time initially provided to study proposed documentation was “woefully deficient.”
If approval of the “agency agreement” was provided at the speed sought by Yellow’s lawyers, Schepacarter said: “This is kind of going to be done, I don’t want to say behind closed doors, but it’s kind of going to be done in the shadows with respect to the sale, and then, eventually, information will come out.”
Yellow’s lawyers want an expedited approval to cut the cash-strapped entity’s storage costs for the trucks and trailers.
In addition, Allyson Smith, representing Yellow at the Oct. 17 hearing, said Nations Capital, Ritchie Bros. and IronPlanet were the only parties who had the capacity to move everything off the debtor’s property onto their own and store it.
Ritchie Bros. units in both the U.S. and Canada would be involved in the auction process. IronPlanet is a unit of Ritchie Bros.
Goldblatt said he was “tentatively persuaded” by the argument from Yellow’s lawyers in an Oct. 16 court filing on the business reasons for why getting this done sooner rather than later is good for all parties.
Image
Ritchie Bros. units in both the U.S. and Canada would be involved in the auction process. (Ritchie Bros. Auctioneers)
The hearing and the dispute over speed at which the sale process will get underway came after an original Oct. 13 bid deadline and Oct. 18 auction were postponed.
Instead, the administrators expect a sale via the auction houses to realize the most funds, particularly as the auctioneers will be in charge of refurbishing the trucks and trailers.
Some 2,000 of the tractors were bought with $400 million of a $700 million loan provided by the Department of the Treasury in 2020 and will need less refurbishing.
However, much of the rest of Yellow’s fleet was older than the industry average, according to sources, and therefore will need a good deal more refurbishment.
Should the plan proposed by the administrators be approved, the auction houses would have 45 days to develop an “advertising, removal, transportation, storage, disposition and marketing plan (including the timing, sale modality and location) for the marketing, removal, transportation, storage and sale” of the trucks and trailers.
Yellow’s administrators would prefer for all the rolling stock to be moved from company property within three months of the auction houses being retained to sell the trucks and trailers, but they must be removed within six months. The agency agreement has an 18-month life span.
The auction houses’ fee for selling the rolling stock was redacted from the court documents.
Beyond the rolling stock, a Nov. 9 bid deadline was set by Yellow for selling the company’s 169 terminals, as well as other non-rolling stock assets. An auction will then be held Nov. 28, if necessary, and the names of the winning bidders and backup bidders revealed Dec. 1.
Estes Express Lines is the stalking horse bidder for the terminals — Yellow’s most valuable assets. Richmond, Va.-based Estes offered $1.525 billion.
A stalking horse bid is an initial offer on the assets of a bankrupt company that sets a bar that means others cannot make lower bids.
Old Dominion Freight Line Inc. previously offered $1.5 billion to acquire the terminals Aug. 18, topping a $1.3 billion Estes Express bid on Aug. 17.
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