Major Bus Operator Seeks Bankruptcy Protection
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Major Bus Operator Seeks Bankruptcy Protection

January 9, 2012

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One of the country’s largest domestic bus operators, commonly known as Coach America, is filing for bankruptcy in a Delaware bankruptcy court, according to reporters at the New York Times.

The company’s bankruptcy filing does not come as much of a surprise to industry insiders, as Coach America reportedly admitted it had more than $400 million in debts, compared to only a few hundred million dollars in assets.

The company advertises itself as the largest tour and charter bus operator in the country, as it reportedly has more than 3,000 buses in its fleet. However, while Coach America’s business has remained relatively solid during the economic recession, it cited its massive debt load as the reason for its bankruptcy filing.

Sources say that, over the past 11 months, the company lost $27 million, despite overall revenue during that period of more than $400 million. The company’s largest creditors include Universal Studios and SC Fuels.

According to a company representative, Coach America hopes to use bankruptcy law to restructure the organization , particularly its "capital structure." Rising fuel costs and increased competition from low-budget bus carriers like Megabus and Greyhound have caused stress on bus companies across the country, despite an increase in ridership due to the rising costs of travel via airplanes and trains.

Despite these concerns, though, Coach America carved out a lucrative niche in the transportation market by offering tours and chartered trips across the country. This businesses plan may still prove successful in the future.

Like many companies that enter Chapter 11 bankruptcy, Coach America intends to remain in business during its bankruptcy proceedings. To help with this goal, the company recently secured a $30 million loan from its existing lenders.Thanks to this loan, the company envisions no drastic changes in its services while it reorganizes its financial structure in bankruptcy court. 

However, Fenway Partners, a private equity firm that invested $60 million in Coach America in 2007, stands to lose a great deal of money. Nevertheless, by filing for bankruptcy, Coach America has given itself a fighting chance to eliminate its debt and change the way it does business.


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