Major bus services parent company, Coach USA, has declared insolvency and is set to begin bankruptcy proceedings in Delaware with plans to sell assets to reduce debt. This decision comes following major losses since the 2019 takeover by Variant Equity.
Variant Equity Advisors, a private equity firm, purchased Coach USA for an alleged $270 million, resulting in substantial financial obligations, evident in their balance sheets. The financial situation of the company worsened significantly with the outbreak of the COVID-19 pandemic, as passenger numbers dramatically fell.
The drop in tourism and commuter counts has severely affected annual revenue causing staff lay-offs and reduced work schedules. Despite these difficulties, the company remains committed to public service and plans to recover when pandemic effects recede.
Even with bankruptcy looming, Coach USA CEO Derrick Waters insists that bus services will continue without interruption. Waters expressed gratitude for the continued support from stakeholders and the public, crucial for navigating these tough times. Plans are in place for streamlining operations, cost reductions, and enhanced revenue opportunities.
As they enter Chapter 11, Coach’s debts amount to nearly $197.8 million, inclusive of a $37 million pandemic relief loan from the CARES Act, and $134 million in pending payments.
Coach USA insolvency prompts asset sales
Amid these challenges, Coach remains hopeful and plans to restructure their operations to stay afloat. The company explores negotiations for possible debt forgiveness or extended payment terms with creditors.
Coach USA operates with over 2,070 vehicles and employs nearly 2,700 people. The company reportedly plans to enter into three separate sales contracts, potentially involving 16 of their 25 divisions, expecting to retain around 2,100 of their employees. While some services may be restructured or relocated, the company is committed to a seamless transition for affected employees and customers.
Companies including Renco Group, Avalon Transportation, and ABC Buses are potential buyers of Coach USA’s assets. ABC Buses is set to make the most significant purchase, adding 143 double-decker buses to its fleet for around $2.3 million. This transaction stands to revolutionize the bus transportation industry, enabling the participating companies to offer improved and diversified services to their customers, aligning with the industry’s push for improved public transportation infrastructure.
