Coach USA, which operates Megabus and other commuter bus routes in the United States and Canada, filed for bankruptcy protection in Delaware late Tuesday as it seeks to sell assets and reduce debt arising from its ill-timed 2019 private equity buyout.
Coach, the largest privately owned bus company in the United States, was acquired by private equity firm Valiant Equity Advisors for $270 million, with most of the money coming from debt remaining on the company’s books.
Coach quickly found itself struggling to pay its debts after bus ridership fell 90% from 2019 to 2020 due to the coronavirus pandemic, according to documents filed in bankruptcy court in Wilmington, Delaware.
While ridership has recovered somewhat from 2020 lows, it will still be only 45% of pre-pandemic levels by 2023, and the company faces rising interest rates and increased costs for employee retention and basic needs like fuel, Coach said in court filings.
Coach CEO Derrick Waters said buses would continue to operate normally despite the company’s bankruptcy.
“Our top priority is safely transporting the millions of passengers who choose our buses each year and working closely with our valued contract customers and transportation agency partners,” Waters said in a statement.
Coach filed for Chapter 11 bankruptcy protection with $197.8 million in debt, including $37 million in pandemic relief loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and at least $134 million in other outstanding debts, including trade debt.
Coach USA operates in 27 locations across the United States and Canada, employs 2,700 people and operates a fleet of 2,070 buses. In addition to Coach, the company also operates several other bus brands, including Megabus, Dillon’s Bus Company and Go Van Galder.
Coach entered bankruptcy with three completed sales agreements, each of which is subject to higher and better offers. The sales agreements cover 16 of Coach’s 25 business lines and would preserve the jobs of approximately 2,100 Coach employees, according to court documents.
Private investment firm Renco Group will buy most of Coach’s assets in exchange for assuming $130 million in debt and some union contracts.
Avalon Transportation will acquire bus routes in Atlanta, Georgia and western states as well as Coach’s specialized tour bus division for $14.8 million, while ABC Bus will acquire the company’s fleet of 143 double-decker buses for $2.3 million, according to court documents.
