YRC Trucking Avoids Bankruptcy

After looking dead for all the world, YRC Trucking has avoided bankruptcy at the proverbial eleventh hour by coming to a debt stock swap agreement with creditors.

YRC Trucking is a huge company. It is also one that has been carrying a huge amount of debt. How much? We are talking $470 million dollars. As I said, that is a lot of debt. In fact, it was more than enough to make most prognosticators view bankruptcy as the only solution for YRC. Alas, it wasn’t.


YRC has been continually trying to talk its creditors into forgiving the debt. Now, nobody just forgives $470 million dollars in debt! Given this, YRC offered to give the creditors the equivalent amount in stock. Put another way, the company offered the creditors an ownership position in company that is so unprofitable that it really should have been in bankruptcy. Hey, what a deal!

The creditor response was pretty much what you would probably guess. If a creditor had a thumb and four fingers, you can guess which one would have been raised! The problem, of course, was the creditors stood to lose everything if bankruptcy was actually filed. So, what should they do? Ultimately, they agreed to take the deal and, much to the surprise of everyone, YRC Trucking is a functioning business today with no debt.



So, does this mean YRC is out of the woods? Not even remotely. The problem is the company hasn’t done anything that will resolve the basic problem that it is not a profitable business. Instead, it will simply start accruing debt again. This is partly its fault, but also partly a problem caused by the economic situation in the trucking industry. For drivers, however, it is good to know that the paychecks will keep coming.

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