PHOENIX–The 417 employees of prominent West Coast carrier Silverado Stages were informed in December that the operation was closing, sources told Bus & Motorcoach News.
Silverado Stages had filed a Chapter 11 bankruptcy reorganization petition in federal court on Oct. 8, blaming its unsuccessful merger with the carrier Michelangelo Leasing, “unsustainable, near predatory” competition and a soft secondary market for the sale of excess motorcoach assets.
Silverado, founded in 1987, was headquartered in Phoenix and operated more than 300 vehicles from 10 facilities in California, Nevada and Arizona. The company said it was one of the largest privately owned bus operators in the western U.S. The court filing stated that Silverado had 317 full-time and 110 part-time employees.
Silverado listed $1.1 million in cash and $1 million in accounts receivable among its assets in the bankruptcy petition, which was filed in the U.S. Bankruptcy Court for Arizona. Unsecured debt was reported at approximately $3 million.
The owners of Silverado “infused $1.1 million . . . to support cash flow” in 2018, “the equivalent of one month of debt service,” the filing stated.
Throughout 2017 and 2018, the document said, Silverado had been reducing employee headcount, shedding marginal services and selling “excess motorcoach fleet in an orderly and equity-preserving fashion.”
Silverado said it was forced to file for bankruptcy after VFS Leasing and Volvo Financial Services “asserted a $15.6 million claim against the Debtors related to alleged breaches of contract on account of vehicle loans and leases.”
The company said it proposed “a non-bankruptcy resolution to pay them over time. Unfortunately, VFS declined to work in a consensual manner and took aggressive action to retake alleged collateral.”
Sources said that Silverado employees were told on Wednesday, Dec. 12, that the carrier would be shuttered at the end of that week. Silverado executives could not be reached for comment by deadline.
The company’s problems began with the 2016 acquisition of Michelangelo Leasing of Arizona, the petition explained:
“The Debtors, when combined with Michelangelo, almost immediately struggled to meet revenue and cash flow projections. The acquisition did not go as planned, and Michelangelo’s forecasted revenue of $30 million only generated about $20 million.
“Simultaneous with the acquisition, macroeconomic and regionally competitive labor markets drove up driver costs. Additionally, many local competitors moved to highly uneconomical and unsustainable, near predatory, pricing.
“Throughout 2017 and 2018, the Debtors acted to reduce headcount and to shed low- and no-margin service routes. The Debtors also addressed their fleet size by creating an orderly plan to reduce excess motorcoach fleet in an orderly and equity-preserving fashion.
“Though the Debtors attempted to address the substantial unexpected revenue shortfalls, the decline far exceeded management’s worst expectations, resulting in substantial headcount downsizing lag and an inability to conduct an effective fleet restructure. To exacerbate the financial issues, the secondary market for motorcoach assets has continued to soften nationwide.”
When the bankruptcy petition was filed in October, Silverado expressed expectations that “they will be able to successfully confirm a Chapter 11 plan of reorganization that will restructure the Debtors’ secured debt and provide a meaningful payment to unsecured creditors.” Silverado executives were active in the leadership of the United Motorcoach Association, American Bus Association and California Bus Association.
The company received the UMA 2015 Vision Award for progressive industry leadership and the 2016 Green Highway Award for its aggressive adoption of low-emission diesel and compressed natural gas fuel technology. At the 2018 UMA Expo, Silverado was presented the first Marketing of the Year Award from the Motorsports Marketing Council.
