Coach USA, the largest privately-owned bus company in the United States, filed for Chapter 11 bankruptcy protection in Delaware on Tuesday evening, according to a new report from the New York Post.
The company, which operates popular bus lines such as Megabus, Dillon’s Bus Company, and Go Van Galder, has been struggling with financial challenges stemming from a 2019 private equity buyout and the devastating impact of the COVID-19 pandemic on ridership levels.
The bankruptcy filing comes as Coach USA seeks to sell its assets and restructure its debt, which has become increasingly burdensome due to the ill-timed $270 million acquisition by Variant Equity Advisors just prior to the pandemic.
According to court documents, the company’s ridership levels plunged by a staggering 90% between 2019 and 2020, leaving Coach USA struggling to service its debt obligations.
Despite a partial rebound in ridership, the company reported that passenger numbers in 2023 remained at only 45% of pre-pandemic levels.
Compounding these challenges, Coach USA has struggled with rising interest rates and escalating costs for essential expenses such as employee retention and fuel.
In a statement addressing the bankruptcy filing, Coach USA CEO Derrick Waters reassured customers that the company’s buses will continue to operate as usual during the proceedings.
Private bus companies in the US are struggling to adapt to changing ridership in the aftermath of the Covid-19 pandemic. Read it here in The Brink. https://t.co/Lif3ZVn8SI
— Bloomberg Markets (@markets) June 18, 2024
“Our top priority remains safely carrying the millions of passengers who choose our buses each year and working closely with our valued contract customers and transportation agency partners,” Waters said.
The bankruptcy filing shows that Coach USA has entered Chapter 11 with a total debt of $197.8 million, including a $37 million pandemic relief loan under the CARES Act and at least $134 million in other unpaid obligations, such as trade debts.
The company currently operates in 27 locations across the United States and Canada, employing 2,700 individuals and maintaining a fleet of 2,070 buses.
As part of the bankruptcy process, Coach USA has secured three sale agreements, all of which are subject to higher and better offers.
These agreements encompass 16 of the company’s 25 business lines and aim to preserve jobs for approximately 2,100 employees.
Renco Group, a private investment company, has offered to acquire the majority of Coach USA’s assets in exchange for assuming $130 million of the company’s debt and certain union contracts.
Additionally, Avalon Transportation has agreed to purchase bus lines in Atlanta, Georgia, and Western states, as well as specialized tour bus divisions, for $14.8 million.
ABC Buses has also committed to acquiring a fleet of 143 double-decker buses for $2.3 million.
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The bankruptcy of Coach USA is expected to have far-reaching consequences for the many individuals and groups who rely on bus transportation for their daily commutes, long-distance travel, and tour experiences.
