Coach USA, the operator of Megabus and other commuter bus lines in the U.S. and Canada, filed for bankruptcy protection in Delaware late Tuesday, seeking to sell its assets and shed debt incurred in an ill-timed 2019 private equity buyout.
Coach, the largest privately owned bus company in the U.S., was acquired by private equity firm Variant Equity Advisors for $270 million US, mostly using debt that is still on the company's books.
The company is selling the majority of its bus lines — including Megabus Canada — to holding company The Renco Group, in exchange for taking on $130 million US of company debt and certain union contracts. Others will be sold to car rental service Avalon Transportation Inc.
"Once completed, these proposed transactions will preserve thousands of jobs and ensure uninterrupted passenger transportation services to millions of passengers throughout the United States and Canada," the company said in a statement.
CBC News has reached out to The Renco Group for more information about what this means for Canadian travellers.
Buses will continue to run as normal, says CEO
Coach quickly ran into trouble servicing its debt, as the COVID-19 pandemic caused bus ridership to decline by 90 per cent from 2019 to 2020, according to documents filed in a Wilmington, Del., bankruptcy court.
While ridership levels have rebounded somewhat since the lows of 2020, they were still only 45 per cent of pre-pandemic levels in 2023, and Coach has faced higher interest rates and increased costs for basic needs like employee retention and fuel, Coach said in its court filings.
Coach CEO Derrick Waters said that buses will continue to run as normal during the company's bankruptcy.
"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.
Megabus is serving our passengers as normal and without interruption today, tomorrow, and beyond. As always, you can track schedules and book tickets through the Megabus app and at <a href="https://t.co/49cdpRWni9">https://t.co/49cdpRWni9</a> and <a href="https://t.co/l2mdeQu620">https://t.co/l2mdeQu620</a>. <a href="https://t.co/EXD4sSKDhG">pic.twitter.com/EXD4sSKDhG</a>
—@megabusCoach entered Chapter 11 with $197.8 million US in debt, including $37 million US due on a pandemic relief loan under the Coronavirus Aid Relief & Economic Security (CARES) Act, and at least $134 million US in other unpaid obligations, including trade debts.
Coach USA operates in 27 locations in the U.S. and Canada, with 2,700 employees and 2,070 buses. The company operates several other bus brands in addition to Coach, including Megabus, Dillon's Bus Company and Go Van Galder.
Coach entered bankruptcy with three sale agreements in place, each of which is subject to higher and better offers. Those sale agreements cover 16 of Coach's 25 business lines, and they would preserve jobs for about 2,100 Coach employees, according to court documents.
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2024-06-13 15:54:33Z
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