Coach USA, the company behind Megabus and other intercity bus services has announced its decision to file for bankruptcy protection in Delaware. This move comes as the company aims to restructure its financial obligations following a challenging private equity buyout in 2019.
Variant Equity Advisors, a private equity firm, acquired Coach, the largest privately-owned bus company in the United States, for $270 million. The majority of this acquisition was financed through debt, which remains a significant liability for the company.
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As a result of the COVID-19 pandemic, Coach faced challenges in meeting its debt obligations. The company’s financial documents, submitted to the bankruptcy court in Wilmington, Delaware, revealed a drastic 90% decline in bus ridership from 2019 to 2020, further exacerbating its financial difficulties.
Despite some recovery in ridership levels since the downturn in 2020, Coach reported that they remained at only 45% of pre-pandemic levels in 2023. The company also highlighted challenges such as higher interest rates and increased expenses for essentials like employee retention and fuel, as outlined in their court filings.
Coach’s CEO, Derrick Waters, assured that bus operations would continue as usual throughout the bankruptcy proceedings.
“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 in a statement.
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Upon entering Chapter 11, Coach disclosed a total debt of $197.8 million, which includes a $37 million obligation for a pandemic relief loan obtained through the Coronavirus Aid Relief & Economic Security (CARES) Act. Additionally, the company has unpaid obligations of at least $134 million, primarily in the form of trade debts.
Operating in 27 locations across the US and Canada, Coach USA employs 2,700 individuals and runs a fleet of 2,070 buses. Apart from the Coach brand, the company also manages other bus lines such as Megabus, Dillon’s Bus Company, and Go Van Galder.
As part of its bankruptcy proceedings, Coach has secured three sale agreements, subject to potential higher bids. These agreements pertain to 16 out of the company’s 25 business lines and are designed to safeguard jobs for approximately 2,100 Coach employees, as stated in court documents.
