Handlers of Yellow’s estate asked a Delaware bankruptcy court on Tuesday to allow the use of auction houses to facilitate the liquidation of the company’s equipment portfolio.
A motion before the court named Nations Capital, Ritchie Brothers and IronPlanet as the chosen parties to sell the defunct less-than-truckload carrier’s fleet of more than 60,000 units. The portion of the portfolio that Yellow owns includes roughly 12,000 tractors and 35,000 trailers. The agency agreement, inked on Monday, said the auction houses would “act as the Debtors’ exclusive marketer, broker, and auctioneer of the Rolling Stock Assets.”
The filings showed six different liquidators provided proposals.
A Friday filing said that a bid deadline of Oct. 13 and an auction date of Oct. 18 had been extended with new dates yet to be determined.
Restructuring firm and adviser to Yellow, Ducera Partners, said in a filing that retention of a liquidator would be the best avenue for the company to unwind its equipment portfolio. The filing said the auction houses were best suited to remove, refurbish and market the assets.
“The Agent is an industry-leading marketer, auctioneer, and broker of assets of this type with vast industry connections and experience,” Ducera said. “To best maximize the value of the Rolling Stock Assets and the estates, it is, in my opinion, in the Debtors’ best interest to retain the Agent so that the Debtors and their estates can directly benefit from the Agent’s expertise, experience, and market access.”
An Oct. 27 hearing date was set in order to give the U.S. Trustee’s office time to present or work through its objections.
The filings also said the auction houses will provide free storage. The estate would have incurred storage fees to park equipment at the terminals once they exchange hands. Estes Express Lines’ winning $1.525 billion stalking horse bid for Yellow’s 174 owned terminals allowed for 30 days of free storage, which was valued at more than $10 million.
Estes’ bid essentially placed a minimum valuation for the sites. Those properties are expected to be bid on by other suitors as well. The bid deadline for the terminals is Nov. 9, with an auction date of Nov. 28 if needed.
Commissions and terms of the agency agreement were not disclosed. A separate filing asked the court to allow the negotiated fees with the auction houses to remain undisclosed as public knowledge “would compromise the Agent’s bargaining position in future negotiations.”
The U.S. Treasury, which is owed more than $737 million as part of a 2020 COVID-relief loan package, as well as the unsecured creditors committee were said to have participated in the negotiations with the auction houses and support the plan.
Yellow used a $400 million tranche of Treasury financing to buy 2,400 tractors over a 15-month period that included 2021. The Treasury holds first-priority liens on the aforementioned equipment in addition to roughly 3,500 trailers that were also purchased as part of the loan program.
The sale of Yellow’s equipment comes on the downside of the freight cycle. Used equipment prices have retreated to more normalized, historical averages. Equipment prices surged during the pandemic as fleets rushed to meet increased demand and as OEMs grappled with components shortages and labor challenges.
The filings noted that since the marketing process began more than 150 parties have signed confidentiality agreements, specifically expressing interest in the company’s equipment. Past reports suggested the company’s rolling stock could fetch as much as $900 million.
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