💥Put me in COACH💥
Big Lots, Sam Ash, LL Flooring Holdings Inc., Rite-Aid + More.
We’ve talked about buses in bankruptcy before but usually we’re referring to someone — say, a creditor or a professional or a former management team member — getting thrown under the bus.
It’s not very frequently that the bus, itself, drives into bankruptcy.
On June 11, 2024, bus operator and “mobility solutions” provider (wtf, lol) Coach USA Inc. and 94 affiliates (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Walrath) — another company, similar to Vyaire Medical Inc. which also filed this week, to suffer from the long-arm of the COVID-19 pandemic.
That’s right. The pandemic; it’s still claiming victims. Driver shortages and severe declines in ridership caused by the pandemic helped do the debtors in. After all, it’s tough enough, on one hand, not to have the ridership your private equity overlords might have projected at the time of purchase…
… best timing ever btw … but even tougher when you don’t have the drivers to service what little demand you do have.
“Oh c’mon, PETITION, how bad could demand still be this far after the pandemic receded?”
Ridership declined a staggering-yet-unsurprising 90% in ‘20 compared to pre-pandemic ridership. In ‘21, the decline improved to 74%. In ‘22, to ‘61%. And in ‘23, ridership remained down 55% compared to pre-pandemic levels, 😬. You work-from-home types did this, damn you!
You might be wondering, “with ridership that atrocious, how the f*ck did the company even survive this long?” and that is an awfully fair question. And here is your answer:
Oh you didn’t actually think Variant Equity was cutting a steady stream of equity checks for four years, did you?
Nooooooooooooooooooooooooooooooooo.
Instead, the debtors tapped the Federal Reserve System’s Main Street Lending Program —created under the Coronavirus Aid Relief & Economic Security (CARES) Act — for a $35mm unsecured loan in December ‘20. And then in August and October ‘21, the debtors received a total of $78.3mm in grants from the federal government’s Coronavirus Economic Relief for Transportation Services program. Anyone want to guess who the debtors’ largest general unsecured creditor is? Money well spent, guys!