United States and Canada operator Coach USA, owned by Stagecoach until 2019, has filed Chapter 11 bankruptcy proceedings in Delaware. It has commenced a voluntary sale process of its businesses after being unable to survive the pandemic impact and being mired in what is reportedly over US$200 million of debt.
Those units include Megabus in North America and various others. Affiliates of The Renco Group and Avalon Transportation have each entered into asset purchase agreements with Coach USA for certain operating companies. Sales of others are being pursued, although some of those may be wound down and thereby leave unsecured creditors.
Coach USA continues to operate as normal while subject to bankruptcy proceedings and says that when the sales are complete, thousands of jobs will be saved. It adds that services will be uninterrupted.
The business lays the blame for its demise at the door of the COVID-19 pandemic. Some of its operations are heavily reliant on commuter flows and Coach USA says that it has faced “significant challenges as ridership and demand in the industry have remained well below pre-pandemic levels.”
It adds that after an assessment of options and with the support of financial stakeholders, initiating a court-supervised sale process “provides time and flexibility for the company to maximise the value of its assets and is the best path forward for its people, communities, and customers.”
Megabus service delivery in North America will follow “an ongoing transition to the existing partnership business model,” Coach USA says. Megabus intellectual property and retail operations form part of one of the asset sale agreements.
Stagecoach purchased Coach USA in 1999 for over £1 billion, reportedly beating FirstGroup and National Express to secure the acquisition.
Then-Stagecoach Chairman Sir Brian Souter spoke of the deal as an entry to the wider North American market for Stagecoach, and further bolt-on businesses were quickly added.
However, Coach USA became a millstone, with various write-downs and suggestions of poor performance. It suffered heavily after the September 11 attacks and came under heavy competition from low-cost operators in its core north-eastern United States market.
After downsizing via sales and closures of operating units, Stagecoach disposed of its North American arm to Variant Equity in 2019 for around £215 million. At that time, it had around 2,200 vehicles, a vastly lower number than in 1999. Coach USA can trace its history to 1922.
