COACH USA voluntarily filed for bankruptcy after ridership remained low in the wake of the pandemic — but customers’ tickets will still be valid.
The company — which owns Megabus and two dozen other companies — filed for Chapter 11 bankruptcy on June 11 in the District of Delaware after racking up hundreds of millions in debt, according to court documents seen by The US Sun.
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The US coach said in a Press release that the voluntary order was used to “facilitate sales processes to preserve jobs, ensure continued services and maximize the value of its business” as it is still struggling to increase passenger numbers since the pandemic.
“As we move through this process, our top priority continues to be safely transporting the millions of passengers who choose our buses each year and working closely with our valued contract customers and partner transportation agencies,” said Coach USA CEO , Derrick Waters, in a statement.
The bus company said there will be “uninterrupted passenger transportation” while the bankruptcy process is ongoing.
“The company is operating normally and remains focused on operating safely and serving customers in the United States and Canada,” it said in a statement.
To further calm customer concerns, the company wrote on X, formerly known as Twitter: “Megabus is serving our passengers normally and without interruption today, tomorrow and beyond.”
The company has entered into three different sales agreements, including with an affiliate of The Renco Group, Inc., Bus Company Holdings US, LLC, for several bus lines, including lines: Dillon’s, Elko, Megabus Retail, Montreal, Olympia and more .
They also entered into an agreement with Avalon Transportation for Lenzner, Kerrville, All West and ACL Atlanta.
US Megabus’ intellectual property and retail operations are also part of the transaction, according to the company.
“US Megabus operations will continue as the company seeks a seamless transition to its existing partnership business model,” Coach USA said in a statement.
Coach USA – which was purchased by Variant Equity Advisors in 2019 for $270 million – filed for bankruptcy to save jobs. They currently employ 2,700 workers and have 2,070 buses, according to a court document seen by The US Sun.
“At the heart of the Debtors’ business are their employees,” the court documents state.
“The Company invests significant resources to recruit, train and retain the best drivers and other employees, which is crucial to the Company’s success and safety record.”
During the pandemic, Coach USA lost many pilots as well as passenger numbers.
Despite regaining some of its driving force, ridership has remained low since the pandemic – especially compared to other forms of public transport.
By the end of 2022, ridership was up just 40% compared to pre-pandemic numbers for major bus companies, according to one study. American Bar Association survey.
“Unfortunately, however, the slow pace of recovery from passenger minimums from the COVID-19 pandemic has negatively impacted the company’s liquidity position and its ability to repay existing debt,” the court documents state.
Air traffic has doubled since the pandemic, soaring from 31.7 million in December 2020 to 74.9 million two years later, according to the Department of Transport Statistics.
In 2023, Amtrak ridership increased nearly 30% with 28.6 million passenger trips – an increase of nearly 25% compared to fiscal year 2022, the company he said.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps businesses eliminate debts they cannot pay.
The process allows businesses to start from scratch and gain access to new credit.
Overseen by federal courts, bankruptcies allow a company to more easily sell its assets to pay creditors, according to Investopedia.
Chapter 11, a common process for businesses, is used to restructure a business with the goal of staying open — even if it means selling most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows collaboration between U.S. and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” according to the United States Courts.
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