Yellow Corporation files for Chapter 11 bankruptcy protection

BY Richard Summerfield

As it begins to wind down its near 100-year business, Yellow Corporation and a number of its subsidiaries have filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” said Darren Hawkins, chief executive of Yellow, in a statement regarding the filing. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

“All workers and employers should take note of our experience with the International Brotherhood of Teamsters (“IBT”) and worry,” he added. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”

At the end of July, the company halted operations and announced it was laying off all 30,000 of its workers. It expects to reach an agreement with its creditors, pending approval from the court, that will allow it to pay certain wages and benefits, as well as some obligations to vendors and suppliers. The company disclosed a long list of creditors in its court filing, with Amazon, Home Depot and Goodyear Tire & Rubber Company among the top 30 with unsecured claims.

Yellow has been a significant actor in the shipping space. Indeed, it was one of the dominant carriers in a segment of trucking known as ‘less-than-truckload’ (LTL) - moving pallet-sized shipments of freight. However, by 2022 the company handled only about 7 percent of the 720,000 daily LTL shipments in the US, according to trucking consultant SJ Consulting Group.

While Yellow’s bankruptcy and closure is detrimental to the shipping industry, it also has a negative impact on the American taxpayer. During the coronavirus (COVID-19) pandemic, the company received a $700m loan from the federal government, a loan that resulted in taxpayers holding 30 percent of the company’s outstanding stock. And the company still owed the Treasury department more than $700m according to its most recently quarterly report, nearly half of the long-term debt on its books. The company had about $1.5bn in long-term debt on its balance sheet in its most recent financial report. The government loan is due in September 2024. But the company was in financial trouble long before the pandemic, with poor management and strategic decisions dating back decades often cited as causes for its difficulties.

News: Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

Cineworld exits Chapter 11 bankruptcy protection

BY Richard Summerfield

After nearly 11 months, Cineworld Group has exited Chapter 11 bankruptcy protection in the US. The company is emerging with a greatly reduced debt load, a new board of directors and a number of new executives.

The company has reduced its debt by $4.53bn, raising about $800m in new equity capital and securing new debt financing of around $1.71bn. As a result, it feels it is “well-positioned to pursue future strategic initiatives and continue providing leading cinematic experiences for customers globally, including through investments in new screen formats and enhancements to its flagship theatres”, according to a statement.

“With a transformed balance sheet and a right-sized capital structure, Cineworld is ready and fully able to succeed in this dynamic and constantly changing movie theatre industry,” said Eric Foss, the new chairman of the board of Cineworld. “I am truly excited to introduce the impressive group of directors who will be joining our new Board and whose expertise and leadership in various fields will help us to grow Cineworld’s business and ensure that our theatres continue to be moviegoers’ first choice for memorable cinema experiences.”

“I am honored to join Cineworld and work alongside the experienced management team to unlock the company’s great potential,” said Eduardo Acuna, the new chief executive of Cineworld. “With its talented group of employees, significant number of distinguished business partners and devoted customers around the world, Cineworld has what it needs to reach new levels of success. We will continue to put our guests at the center of everything we do and look forward to continuing to break new ground in our industry.”

In addition to Mr Foss and Mr Acuna, Cineworld has also appointed Ann Sarnoff, former chair and chief executive of Warner Bros, to its board, as well as four other new board members.

Cineworld is the world’s second largest cinema chain, and is the operator and owner of brands such as Regal, Cinema City, Picturehouse and Planet. The company and 104 of its affiliated debtors filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas in early September 2022 to restructure its massive debt. The company’s existing shareholders have been wiped out as part of the financial restructuring, with a new, incorporated company controlled by lenders now controlling Cineworld.

On Monday, Cineworld Group named an administrator in the UK and had its shares delisted from the London Stock Exchange as the company prepared its Chapter 11 exit.

News: Cineworld emerges from Chapter 11 bankruptcy

Financial crime on the dark web on the rise, reveals new report

BY Fraser Tennant

Cyber criminals are increasingly and persistently targeting the financial services sector, particularly banking institutions, using the dark web, according to a new report by Searchlight Cyber.

In ‘Dark Web Threats Against the Banking Sector’, the dark web intelligence company outlines the tactics cyber criminal are using against banking institutions, highlighting the most prominent threats visible on the dark web.

According to the report, the most prominent threat is initial access broker posts which sees threat actors sell vulnerabilities such as remote network access, web shells, remote code execution and SQL injection (a cyber attack that injects malicious SQL code into an application allowing the attacker to view or modify a database) on dark web forums for other cyber criminals, including ransomware operators, to exploit.

“We have observed threat actors that are known to be associated with ransomware groups interacting with initial access broker posts in this report,” said Jim Simpson, director of threat intelligence at Searchlight Cyber. “Knowledge is power, and identifying vulnerabilities being sold before the ransomware operator is able to successfully breach their organisation would be a huge win for defenders.”

Additional threats noted in the report include insider threats, where employees proactively advertise their ability to undermine the security of their organisation, as well as cyber criminals trying to recruit employees at banks, and threats against banks’ supply chains, which sees criminals identify the banks that can be impacted in posts targeting their suppliers.

The report also explains how such dark web intelligence can be used by banks in security practices such as threat hunting, internal investigations and gathering intelligence on the tactics of specific cyber criminals.

“While a lot of the cyber criminal activity described in this report sounds alarming, the point of this research is not to scare banks,” said Jim Simpson, director of threat intelligence at Searchlight Cyber. “In fact, it is to demonstrate the opportunity that the dark web provides to identify threats earlier. Banks are always going to be a target for threat actors, but monitoring the dark web allows them a chance to spot criminal activity in the ‘pre-attack’ or planning stage and gives security teams valuable time to adjust their defences.”

Report: Dark Web Threats Against the Banking Sector

Agri-business AppHarvest files for Chapter 11

BY Fraser Tennant

In what it describes as a “financial and operational transition”, sustainable food company AppHarvest, Inc. has filed for Chapter 11 bankruptcy protection in a bid to it to reduce its outstanding liabilities.

The company has also obtained a commitment from Equilibrium – its largest secured creditor – to provide approximately $30m of debtor-in-possession (DIP) financing to provide the necessary liquidity to support operations during the Chapter 11 process. The DIP financing is subject to approval by the bankruptcy court.

AppHarvest currently has four facilities in Kentucky – a 60-acre flagship tomato farm in Morehead, a 15-acre salad green farm in Berea, a tomato farm in Richmond and a 30-acre farm in Somerset – that grow tomatoes, leafy greens, cucumbers and strawberries.

Business operations will continue at the farms throughout the Chapter 11 process, including shipping product to top national grocery store chains, restaurants and food service outlets.

“The AppHarvest board of directors and executive leadership evaluated several strategic alternatives to maximise value for all stakeholders prior to the Chapter 11 filing,” said Tony Martin, chief executive of AppHarvest. “The filing provides protection while we work to transition operation of our strategic plan, Project New Leaf, which has shown strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality.”

Developing and operating some of the world’s largest high-tech indoor farms with high levels of automation, AppHarvest’s farms are designed to grow produce using sunshine, rainwater and up to 90 percent less water than open-field growing, all while producing yields up to 30 times that of traditional agriculture and preventing pollution from agricultural runoff.

The company went public via a special purpose acquisition company (SPAC) in early 2021 and planned to operate 12 indoor farming facilities by 2025.

AppHarvest’s Chapter 11 filing comes just weeks after fellow indoor agri-tech business AeroFarms filed its own Chapter 11 petition.

News: AppHarvest files for Chapter 11 bankruptcy, aiming for financial and operational transition

Public Storage to acquire rival Simply Self Storage for $2.2bn

BY Richard Summerfield

Storage operator Public Storage has agreed to acquire Simply Self Storage from Blackstone Real Estate Income Trust (BREIT) in a deal worth $2.2bn.

The deal, which is expected to close in the third quarter of 2023, subject to customary closing conditions, will generate over $600m in profit, Blackstone said. The firm acquired Simply in October 2020 from Brookfield Asset Management for approximately $1.2bn.

“We are pleased to welcome Simply’s team, customers, and third-party management partners to Public Storage’s industry-leading brand and platform,” said Joe Russell, chief executive of Public Storage. “This acquisition reflects the continued execution of our multi-factor external growth platform, which includes acquisitions, development, redevelopment, expansion, and third-party management. We are pleased to complete this important transaction with Blackstone, which further demonstrates our position as an acquirer of choice in the industry. Blackstone has done a tremendous job of growing and improving the quality and operations of the Simply portfolio over the past few years.”

“Where you invest matters, and this transaction demonstrates the strong investor demand for the high-quality assets and platforms we have assembled within BREIT,” said Nadeem Meghji, head of Blackstone Real Estate Americas. “This sale is a terrific outcome for BREIT stockholders and enables us to further concentrate BREIT’s portfolio in its highest growth sectors. Public Storage is a leader in its space and will be a terrific steward of this portfolio.”

Simply Storage’s portfolio comprises 127 wholly-owned properties and 9 million net rentable square feet that are geographically diversified across 18 states and located in markets with population growth that has been approximately double the national average since 2018. During BREIT’s ownership period, Blackstone made investments into the Simply platform that enabled the company to enhance the quality of the portfolio and management team, and ultimately significantly increased its net operating income.

Public Storage has been in a state of growth over the last few years. Since 2019, the company has expanded its portfolio by approximately 55 million net rentable square feet, or 34 percent, through $10.6bn worth of acquisitions, development and redevelopment, including Simply and additional properties previously announced as under contract.

News: Public Storage to acquire rival Simply Self Storage for $2.2bn