Coach USA, the operator of Megabus and other commuter bus services in the U.S. and Canada, filed for bankruptcy protection in Delaware on Tuesday. The move aims to sell its assets and alleviate debt incurred from a problematic private equity acquisition in 2019.
The company, acquired for $270 million US by Variant Equity Advisors primarily through debt, is now seeking to sell most of its bus lines, including Megabus Canada, to The Renco Group. In exchange, The Renco Group will absorb $130 million US of Coach’s debt and certain union contracts. Other bus lines will be sold to Avalon Transportation Inc.
In a statement, Coach USA emphasized that these transactions, once finalized, will safeguard thousands of jobs and ensure uninterrupted transportation services for millions of passengers across the U.S. and Canada.
Despite financial challenges exacerbated by the COVID-19 pandemic, which caused a significant drop in bus ridership by 90% from 2019 to 2020, Coach has seen a partial recovery in ridership levels. However, as of 2023, ridership remained at only 45% of pre-pandemic levels. The company also faced increased costs due to higher interest rates, employee retention, and fuel expenses.
CEO Derrick Waters assured that bus operations will continue as usual throughout the bankruptcy process, emphasizing the company’s commitment to passenger safety and service continuity.
Coach USA entered Chapter 11 bankruptcy with debts totaling $197.8 million US, including obligations from a pandemic relief loan and other unpaid debts. The company operates in 27 locations with 2,700 employees and 2,070 buses, managing several bus brands alongside Coach and Megabus.
As part of its restructuring efforts, Coach has secured three sale agreements covering 16 of its 25 business lines, which are contingent upon potentially higher and better offers. These agreements are expected to preserve jobs for approximately 2,100 Coach employees, according to court filings.
