On Tuesday evening, the holding company operating Megabus and other bus commuting services in the United States and Canada, Coach USA, filed for bankruptcy protection in the state of Delaware, seeking to sell assets and rid itself of the debt incurred from an untimely private equity buyout in 2019.
Coach, as reported by Reuters, is the largest privately-owned bus company in the United States. It was acquired for $270 million in 2019 by the private equity firm Variant Equity Advisors, with the acquisition funds mainly being Coach’s existing debt.
According to documents submitted to the U.S. bankruptcy court in Wilmington, Delaware, the company faced challenges in debt repayment due to a 90% decrease in bus passengers from 2019 to 2020 caused by the COVID-19 pandemic.
In the court documents, Coach stated that while passenger volumes had rebounded since hitting a low point in 2020, reaching only 45% of pre-pandemic levels in 2023, the company also faced issues such as rising interest rates and increased basic operational costs like employee retention and fuel.
Derrick Waters, the CEO of Coach, stated in a press release that buses would continue to operate normally during the bankruptcy proceedings. He emphasized, “Our primary mission remains to safely transport the millions of passengers who choose our buses each year and work closely with our esteemed contract customers and transportation agency partners.”
Coach entered bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code with a debt of $1.978 billion.
Operating in 27 regions in the U.S. and Canada, Coach USA has 2,700 employees and 2,070 buses. In addition to the Coach brand, the company also operates several other bus brands including Megabus, Dillon’s Bus Company, and Go Van Galder.
As part of the bankruptcy protection process, Coach has entered into sales agreements with three companies, each offering higher and better bids. According to court documents, under these agreements, Renco Group, Avalon Transportation, and ABC Buses will collectively purchase 16 out of the 25 business lines of Coach, while preserving approximately 2,100 job positions for Coach employees.