Treasury Approved $700 Million Loan To Company Being Sued For Overpricing

Official White House Photo by Andrea Hanks / Public Domain

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YRC Worldwide will receive this loan as the Defense Department sues them for overcharging shipping costs.

On July 1, the Treasury Department approved a $700 million loan to YRC Worldwide. This trucking company is experiencing financial struggles, while the Defense Department sues for overpricing shipping costs. 

  • YRC endured competitive issues in recent years, with its stock dropping nearly 30% this year. According to CNN, the company's worth fell to $70 million by the end of June. 
  • The DOD sued the company in December 2018, claiming that YRC overcharged the government for the movement of shipments for seven years.
  • The complaint said that YRC “reweighed thousands of shipments and suppressed the results whenever they indicated that a shipment was actually lighter than its original estimated weight." This action allegedly cost the agency millions.
  • YRC said the suit is “a contractual dispute which originated in 2009 and predates the current board and CEO by more than a decade.” The company moved to dismiss the suit, and their relationship with the DOD has apparently not been affected. 

Steven Mnuchin, the Treasury Secretary, said in a statement: “We are pleased for Treasury to make this loan pursuant to the CARES Act. This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers.” 

  • The CARES Act is one of the pieces of legislation providing stimulus in the pandemic that was passed by Congress and signed by President Trump in late March.
  • Treasury described YRC as a “leading provider of critical military transportation and other hauling services to the U.S. government and provides 68% of less-than-truckload services to the Department of Defense."

With the new loan, the government will own about 30 percent of YRC’s stock, and the loans will mature September 2024.

Read the full report.

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