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Law360 (June 10, 2021, 8:48 PM EDT) -- A trucking company defended its receipt of $700 million federal pandemic loan that a congressional subcommittee is investigating, saying Thursday that the panel's concerns with its loan eligibility were partly based on a third party's "incomplete" information.
Last week, the Select Subcommittee on the Coronavirus Crisis announced it was probing whether Yellow Corp. — previously known as YRC Worldwide Inc. — had been eligible to receive funds set aside for companies "critical to maintaining national security." In public letters demanding that the White House and Yellow Corp. provide further information on the loan, Rep. James Clyburn, D-S.C., cited watchdog reports casting doubt about Yellow Corp.'s contribution to the national defense.
But Yellow Corp. CEO, Darren D. Hawkins, rebuffed the criticism, saying that Clyburn had omitted critical details in his public requests for information, according to a letter obtained by Law360.
"Please allow me to bring to your attention the following facts which you do not mention in your letter," he said.
In July 2020, the U.S. Department of the Treasury announced the loan to Yellow Corp., which then went by YRC Worldwide Inc., saying that the company provided 68% of the U.S. Department of Defense's less-than-truckload, or LTL, shipping services.
The loan attracted quick scrutiny from the Congressional Oversight Commission, which later reported that it was unable to corroborate that figure. The committee estimated that Yellow Corp. performed between 20% and 40% of the DOD's freight shipping, based on records from Crowley Logistics, the prime contractor for some of Yellow Corp.'s defense contracts.
But Hawkins stood by the DOD's estimates. The vast majority of Yellow Corp's freight shipping was sourced directly through the DOD through voluntary tenders, information that Crowley wouldn't have.
"Crowley's guesstimate is incorrect, as it has an incomplete picture of the total freight shipping services that Yellow provides to the DoD," he said.
He countered reported "abnormalities" in the loan approval process — namely, the Treasury's decision to fast-track the application based on Yellow Corp.'s financial need. No other loan applicant experienced expedited processing, and the Treasury didn't finalize its approval process until months after Yellow Corp.'s loan was issued.
Hawkins further stated that Yellow Corp. had used the funds exactly as intended and had been transparent about its plans to use half of the proceeds for long-term investments into trailers and tractors — a sharp rebuke to claims that capital investments were outside the scope of the loan.
Yellow Corp. will cooperate with the investigation and turn in the requested records, according to the letter.
The documents will "conclusively confirm that the information the company provided in applying for the loan was completely accurate, and the use of the loan funds were and are completely appropriate, transparent and in full compliance with the loan agreements," Hawkins said.
The subcommittee didn't immediately respond to requests for comment.
--Editing by Rich Mills.
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