(DailyDig.com) – The operator of over 20 bus lines, including Megabus, Coach USA, filed for Chapter 11 bankruptcy on June 18 in Wilmington, Delaware. Coach is a privately owned business and the largest bus company in the US.
According to bankruptcy documents, Coach is seeking to remove their debt by selling some assets. Both a 2019 private equity buyout and the ridership decline during the pandemic years from 2019 to 2020 contributed to their problems. The company still owes $270 million in Variant Equity Advisors buyout debt.
Coach reported a 90% decrease in ridership in 2020, and despite an increase in riders by 2023, it only reached 45% of its previous levels. Furthermore, increased fuel prices, labor costs, and insurance increases, along with inflation, have exacerbated their debt problem.
When Coach filed for Chapter 11 bankruptcy, they were currently $197.8 million in debt. This debt amount includes the $37 million they owe for a loan during the pandemic from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The court will supervise several agreements Coach has made with other companies to reduce their debt. Many of Coach’s assets will be sold to Renco Group, a private investment organization. Renco will then take on $130 million of Coach’s debt, as well as some union contracts, retail operations, and intellectual property.
Avalon Transportation will purchase the bus lines for Coach’s Western states and the Atlanta, Georgia, lines. They will also acquire Coach’s division of bus tours for $14.8 million. A fleet of double-decker buses, 143, will be purchased by ABC Buses for $2.3 million.
The agreements will allow Coach to reduce its debt while still covering 16 of its original 25 bus lines. It will also allow them to save the jobs of 2,100 employees. As the bankruptcy proceeds, Coach will continue to serve their 27 bus operation locations, as well as their 2,700 employees.
Derrick Waters, CEO of Coach USA, stated that their priority will always be the safety of their passengers, as well as providing value to their contract customers and agency partners.
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