Shares of indebted trucker Yellow have risen fivefold this week, defying its recent shutdown of operations and impending bankruptcy filing, WSJ Pro Bankruptcy reported. Yellow stock closed yesterday at $3.90, more than doubling for the second day in a row. Some investors were struggling to understand the stock rally, which suggested that buyers see value in Yellow’s equity even as it nears a bankruptcy filing and freight customers take their business elsewhere. Equity ranks junior to debt in bankruptcy and holders typically recover nothing unless creditors are fully paid with a surplus of value left over. Shareholders of bankrupt companies are rarely in the money — usually when the business gets an unexpected boost that restores its solvency. That isn’t likely to happen for Yellow, which faces long odds to exit bankruptcy as a going concern because of the nature of the trucking business. Its customers would be long gone, afraid of leaving their inventory stranded in court proceedings. Yet now that customers have fled, Yellow could be more valuable in some respects in liquidation than as an ongoing operation, in large part because of its real estate and other holdings, said people familiar with the situation.
