Concerns raised before Ruabon's GHA Coaches collapsed
Council officials suspected there was a problem with a coach provider months before the firm collapsed, it has been revealed.
Contingency plans were drawn up in advance by Denbighshire council due to fears over Wrexham-based GHA Coaches.
About 320 people were made redundant when the firm collapsed in July owing £5.2m in taxes.
Its directors face expulsion after a hearing was told upkeep of buses was neglected to keep services running.
Denbighshire was one of the worst affected areas as GHA ran a large number of school contracts and operated all local services in the south of the county, most of which were supported by the county council.
In a report to cabinet, transport manager Peter Daniels said: "In April concerns regarding GHA resulted in officers raising a risk and developing a contingency plan.
"In July, officers immediately reinstated school transport as their top priority [and] during August officers tendered all GHA's school contracts that were closed to the general public."
The aim of the contingency plan was to ensure all communities which had previously been served by GHA would receive some level of service.
"Initially, passengers seemed content and even relieved that at least some form of service had continued. With time, there was a growing concern that reduced reinstatements placed passengers in detriment," the report added.
Stepping into the breach is expected to cost the council an extra £175,000 on school transport this year and next year the figure is likely to be £275,000.
The council has not yet decided its budget for next year, but the report, ahead of a meeting next week, states: "We do know that costs, post GHA, are increasing sharply and that any additional government mitigation for 2016-17 will cease.
"It is also unclear whether the standard government grant will continue as it is. It is therefore prudent to consider exactly what the council can afford in future."