Trucking company Yellow Corp (OTCMKTS:YELLQ) declared bankruptcy on Aug. 7. However, YELLQ stock has remained popular with retail investors even after the company sought bankruptcy protection, which typically wipes out the value of shares. However, according to The Wall Street Journal: “If Yellow also pays off its other obligations, any excess value could flow to its shareholders.”
Now hedge fund MFN Partners, which has obtained a 42% stake in the troubled company in recent months, is asking the U.S. Department of Justice (DOJ) to approve the formation of a committee to safeguard “shareholders’ interests.”
MFN has asked that the DOJ’s bankruptcy unit select a number of shareholders to act as an official “shareholder committee.” The group would be the advocate for all of the company’s shareholders during all bankruptcy proceedings.
Yellow said that it was open to discussing MFN’s idea.
What Else Investors Should Know
MFN has requested that Yellow’s board fill two vacant seats on the panel with candidates that the hedge fund has put forward. Further, MFN wants Yellow to sell its real estate and tractors.
MFN has provided $42.5 million to facilitate Yellow’s shutdown, while another, better-known hedge fund, Citadel, has promised to kick in an additional $100 million.
Another trucking company, Old Dominion Freight Line (NASDAQ:ODFL), has bid $1.5 billion “for most of Yellow’s terminals,” FleetOwner reported recently.
The Price Action of YELLQ Stock
Since bottoming around 83 cents on Aug. 18, YELLQ stock, despite Yellow’s bankruptcy declaration, has soared 140%. However, the name is still down 19% this year and 69% in the last 12 months.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
