Coach USA, Operator of Megabus, Declares Bankruptcy and Seeks Asset Sale

Coach USA, owner of the Megabus brand, has filed for bankruptcy due to pandemic-related declines in ridership. The company owes creditors between $100 million and $500 million. The filing aims to facilitate the sale of certain bus lines and intellectual property, with Renco Group and Avalon Transportation as potential buyers. The company has arranged a $20 million loan to fund the restructuring process.

Introduction:

Coach USA, the owner of the Megabus brand, filed for bankruptcy on December 20, 2022, due to significant declines in ridership caused by the COVID-19 pandemic. The company owes creditors between $100 million and $500 million and aims to facilitate the sale of certain bus lines and intellectual property through the bankruptcy process. Two potential buyers, Renco Group and Avalon Transportation, have expressed interest in acquiring Coach USA's assets.

Bankruptcy Filing and Debt:

Coach USA, a bus company operating in 27 locations in the US and Canada with more than 38 million passengers per year, filed for Chapter 11 bankruptcy in Wilmington, Delaware (Number 1). The company's financial struggles stem from the pandemic's impact on ridership. In their Chapter 11 petition, Coach USA disclosed that they owe creditors between $100 million and $500 million. Chapter 11 of the US Bankruptcy Code is designed to help companies reorganize and shed debt while continuing to operate (Number 1).

Asset Purchase and Sale:

To facilitate the sale of certain bus lines and intellectual property, Coach USA has secured an agreement with Renco Group and Avalon Transportation (Numbers 1, 3, and 4). Renco Group, an affiliate of Renco Holding LLC, and Avalon Transportation plan to act as initial bidders at a court-supervised auction. The winning bidder(s) will acquire Coach USA's Megabus intellectual property and retail operations. Both potential buyers have agreed to provide initial bids, which must be approved by the judge overseeing the bankruptcy case.

Loan and Bankruptcy Funding:

To cover the costs of the bankruptcy proceedings and continue operating during the restructuring process, Coach USA has secured a $20 million loan (Number 1).

Future Outlook:

With the decline in ridership due to the pandemic and the ongoing bankruptcy process, the future of Coach USA and its Megabus brand remains uncertain. However, with potential buyers expressing interest in acquiring the company's assets, there is a possibility that Megabus will continue to operate under new ownership.

Conclusion:

Coach USA, the owner of the Megabus brand, filed for bankruptcy in late 2022 due to pandemic-related declines in ridership. The company owes creditors between $100 million and $500 million and aims to facilitate the sale of certain bus lines and intellectual property through the bankruptcy process. Two potential buyers, Renco Group and Avalon Transportation, have expressed interest in acquiring Coach USA's assets, with the auction process expected to take place under court supervision. The outcome of the bankruptcy proceedings and the future of Megabus remain uncertain.

References:

1. https://www.bnnbloomberg.ca/megabus-owner-coach-usa-files-bankruptcy-looks-to-sell-assets-1.2083947