School Bus, Inc., owner owe at least $1.6 million to local banks

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) – The transportation company tasked with transporting students in Sioux Falls Schools owes at least $1.6 million to Frontier Bank and Reliabank, according to court documents.

Three cases have been opened in Minnehaha County civil court.

The latest, which is from Reliabank, was filed Tuesday in court.

Court documents allege School Bus, Inc., Steven Hey and MSM Partnership, LLP have defaulted on two loans totaling more than $1 million from Reliabank.

MSM Partnership, LLP is a limited liability partnership that was formed in 1998. It’s unclear exactly what the partnership does. However, the three partners involved are also listed as members of the board of directors for School Bus, Inc. in South Dakota Secretary of State business filings.

The first loan was due on July 3. Court documents show as of August 4, School Bus, Inc. owed $505,102.38. That number is going up. School Bus, Inc. owes $159.64 every day the loan is in default.

Similarly, a second loan was due on July 3. Court documents show as of August 7, School Bus, Inc owed $532.227.56. That number is also going up. School Bus, Inc. owes $176.03 every day the loan is in default.

Seven school buses and three coach buses were used as collateral, according to court documents.

Reliabank issued the following statement to KELOLAND News:

Negotiations with School Bus Inc. and Mr. Hey are ongoing and progressing.  We remain hopeful a resolution to this issue will be reached shortly.  While we have opened a file, we do not intend to proceed with any further action unless talks break down.

Reliabank Statement

In addition, court filings show School Bus Inc., and Hey owe $496,313.43 to Frontier Bank plus $88.93 per day on the loan. Two coach buses were used as collateral, according to court documents.

Court documents say “School Bus, Inc. made false statements concerning the priority of the security interest granted to Plaintiff.”

A second complaint was filed in civil court last month by Frontier Bank against Hey and MSM Partnership, LLP. They owe $78,954.17 as of May 3, and that will increase every day by $37.50.

KELOLAND News reached out to Hey’s attorney, Steven Sanford of Cadwell Sanford Deibert & Garry LLP.

“I am not aware of, nor seen, anything about what you refer to concerning Reliabank,” Sanford said in an email.

He also said Hey wasn’t aware of anything as well.

“The Frontier matter is on its way to resolution and I expect the suit to be stayed based on discussions this morning,” Sanford said.

The Sioux Falls School District said it has no comment on School Bus, Inc’s legal issues.

“Our commitment and focus remains to be on the safe transportation of our students,” a Sioux Falls Schools spokesperson said.

School Bus, Inc. is based in Sioux Falls, S.D.

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