Coach USA, the operator of Megabus and other commuter bus lines in the US and Canada, filed for bankruptcy protection in Delaware in an effort to sell its assets and reduce debt incurred during a 2019 private equity buyout. The company was acquired by Variant Equity Advisors for $270 million, mostly through debt that is still on the company’s books. However, Coach began to struggle with servicing its debt as the COVID-19 pandemic caused a drastic decline in bus ridership by 90% from 2019 to 2020.
Despite some rebound in ridership levels since the lows of 2020, Coach still faced challenges with only achieving 45% of pre-pandemic levels by 2023. The company dealt with higher interest rates and increased costs for essential needs such as employee retention and fuel, as stated in court documents filed in Wilmington, Delaware bankruptcy court. Coach CEO Derrick Waters assured that buses would continue to operate as usual during the bankruptcy process, with a focus on safety and maintaining relationships with contract customers and transportation agency partners.
Coach entered Chapter 11 with $197.8 million in debt, including $37 million due on a pandemic relief loan under the CARES Act, and at least $134 million in other unpaid obligations, including trade debts. With operations in 27 locations across the US and Canada, Coach USA employs 2,700 workers and operates 2,070 buses under various brands, including Megabus, Dillon’s Bus Company, and Go Van Galder. The company also entered bankruptcy proceedings with three sale agreements in place, aimed at preserving jobs for 2,100 employees.
Two private investment companies, Renco Group and Avalon Transportation, were part of the sale agreements. Renco Group agreed to acquire a majority of Coach’s assets by taking on $130 million of company debt and assuming certain union contracts. Avalon Transportation would purchase bus lines in Atlanta, Georgia and Western states, as well as specialized tour bus divisions operated by Coach, for $14.8 million. Additionally, ABC Buses agreed to buy a fleet of 143 double-decker buses for $2.3 million. These sale agreements are subject to higher and better offers for 16 of Coach’s 25 business lines.
Overall, Coach USA’s bankruptcy filing was a result of the challenging financial circumstances faced by the company due to the COVID-19 pandemic and the debt burden from the 2019 private equity buyout. Despite these difficulties, Coach remains committed to maintaining its operations and serving its passengers safely during the bankruptcy process. The company’s efforts to sell assets and reduce debt through sale agreements aim to preserve jobs and ensure the continuation of essential bus services in the US and Canada.
