Student Transportation Inc. (STI) subsidiary SchoolWheels Direct Inc. is now managing school bus contractor Atlantic Express’ California operations.

Under a management services agreement that began last Friday, SchoolWheels Direct will provide all of the management and other necessary services to maintain Atlantic Express’ existing school transportation business in California.

In early November, Atlantic Express announced that it had filed for bankruptcy, citing its union battle, bidding issues and challenging earnings as key factors. On Dec. 4, when unionized drivers in New York City voted down a new contract offer from Atlantic Express, the company announced that it would shut down and sell its assets and contracts.

According to last week’s SchoolWheels Direct announcement, Atlantic Express now has 425 school vehicles and school transportation contracts and operations with Los Angeles Unified School District (USD) and Long Beach USD, as well as many private and charter schools in Southern California.

STI subsidiary Student Transportation of America (STA) has been providing school transportation throughout California since 1997 and has been servicing Los Angeles USD for the past four years.

Atlantic Express’ management services agreement with SchoolWheels Direct has been approved by a bankruptcy court and Atlantic Express’ debtors, who are selling various assets in several states.

SchoolWheels Direct will manage only the California operations of Atlantic Express and will receive a management fee through the operations of that business until an asset purchase agreement is closed.

Under the asset purchase agreement, which has also been approved by the court, STA may purchase the California assets of Atlantic Express, including vehicles and school contracts, contingent on receiving various school district consents and the conclusion of final negotiations between the Atlantic Express debtors and other creditors allowing for the free and clear transfer of the vehicles to STA.

"Atlantic Express has a very good service reputation in California, and we are pleased that our company, SchoolWheels Direct Inc., has been chosen by the court and the debtors to operate and manage the California business until such time negotiations are final on the purchase of the vehicles and suitable arrangements for a seamless transition can take place," said Denis Gallagher, CEO of STI. "We would hope to transfer the business to our local operating subsidiary by the end of March; however, it could be much sooner.”

Gallagher added that the SchoolWheels Direct business “has been growing in many states with various transportation and management services contracts. Our history and expertise in the industry is what the court and Atlantic Express' debtors were seeking to ensure customers and employees [that] there would be continuity in service without disruption."