(Bloomberg) -- Bankrupt bus company Coach USA won court approval to sell its Megabus commuter service, including routes connecting New York and New Jersey, after lower-ranking creditors dropped their opposition.
US Bankruptcy Judge Mary Walrath said she would sign orders allowing Coach’s main businesses to be sold in an auction next month in which Renco Group will be the lead bidder. The New York investment company will assume $130 million of Coach’s debt as part of its binding, initial offer.
The auction had been threatened by objections from an official committee of unsecured creditors to the Renco bid and a related financing package that was designed to fund the company’s Chapter 11 bankruptcy case. The committee had accused the bus company’s lenders, led by Wells Fargo & Co., of trying to get repaid by trampling the rights of lower-ranking, unsecured creditors.
Changes to the sales contract and the financing protect lower-ranking creditors and will ensure commuter services are not disrupted as Coach sells itself, Shari I. Dwoskin, an attorney with the unsecured creditors committee said during Friday’s court hearing.
Under new terms of a financing package with Wells Fargo, Coach will get about $20 million in fresh cash and $180 million of debt will be refinanced.
Coach USA operates a number of commuter services in the New York City area, including Rockland Coaches, Short Line, Suburban Transit and Community Coach.
The company blamed its bankruptcy on a decline in commuter ridership during the pandemic.
Coach USA has said that the bankruptcy is intended to sell certain bus lines to an affiliate of Renco, as well as its Megabus intellectual property and retail operations. Avalon Transportation has also agreed to buy some Coach assets, the company said.
Coach offers bus services in 27 locations in the US and Canada and carries more than 38 million passengers every year, according to its website. Its Megabus service has carried more than 50 million people through more than 280 cities since it was started in 2006. The company employs about 2,700 people.
The case is Coach USA, Inc. 24-11258, US Bankruptcy Court, District of Delaware (Wilmington).
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