Coach America Holdings Inc, the largest U.S. tour and charter bus operator, filed for Chapter 11 bankruptcy protection after being unable to restructure more than $400 million of debt as losses piled up.
The Dallas-based company, which operates buses in 26 U.S. states under its own name and the Gray Line, American Coach Lines and CUSA brands, filed for protection from creditors with the U.S. bankruptcy court in Wilmington, Delaware.
Forty-eight affiliates also filed for protection, a court filing shows. Private equity firm Fenway Partners is the main equity sponsor for Coach America, which said it has lost $207 million since the end of 2009.
Coach America operates more than 3,000 vehicles, including 1,623 full-size motor coaches and 902 vans, and is the nation's second-largest motorcoach service provider.
The company said it employs 6,000 people, and will operate normally while in bankruptcy.
Chief Restructuring Officer Brian Cejka, a managing director at restructuring adviser Alvarez & Marsal, in a court filing called Coach America's business "operationally sound."
He nevertheless said the company has suffered from the economic downturn and a liquidity shortfall, causing it to defer capital improvements.
Cejka called the bankruptcy filing an "unfortunate but necessary step" that will allow Coach America to restructure its debt and maximize the value of its assets.
A Fenway spokesman declined to comment.
Standard & Poor's last month said Coach America had been experiencing "significant earnings pressures" over the last year, despite efforts to cut costs and boost efficiency.
Coach America lost $27 million in the 11 months ended November 30 on net revenue of $417 million, on top of a $180 million loss the prior year, Cejka said.
The company had about $274 million of assets and $402 million of liabilities as of November 30, he added.
Coach America said it has obtained $30 million of debtor-in-possession financing from lenders led by JPMorgan Chase & Co (JPM.N) to keep operating while in bankruptcy.
The company has retained Alvarez & Marsal and the law firm Lowenstein Sandler as advisers.
The case is In re: Coach Am Group Holdings Corp, U.S. Bankruptcy Court, District of Delaware, No. 12-10010.
(Reporting by Jonathan Stempel in New York; Additional reporting by Greg Roumeliotis; editing by Gerald E. McCormick and Richard Chang)