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YRC Worldwide Has Solvency Problems

Today, Solus Alternative Asset Management LP raised its stake in YRC Worldwide (NASDAQ:YRCW) four-fold to nearly 12%. Solus is a hedge fund that focuses in investing in distressed and bankrupt entities, either through equity or debt. The market rejoiced at news of Solus's stake with YRCW shares rallying more than 20%. However, YRC Worldwide clearly is a distressed situation, fending off bankruptcy in the aftermath of the financial crisis. While Solus is clearly bullish on YRCW's turnaround, I am less optimistic. Investors need to be aware that YRC faces mature solvency issues and need to recognize the major risks it faces.

YRC Worldwide is a trucking company that focuses on shipping small freight with a focus on industrial...

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