Powell Steel Over 1 Issue, Has Another [Intelligencer Journal (Lancaster, PA)]

Business Editor

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Powell Steel has dodged one bullet.

Whether it dodges a second remains to be seen.

In the first instance, Powell Steel has worked out an agreement to continue its insurance coverage, allowing the firm to stay in business.

But in the second, it's unclear whether the ailing company will be allowed to stay in its Baumgardner Road plant.

The insurance agreement was disclosed in a recent bankruptcy court filing by Powell Steel, a fabricator and erector of structural steel.

Powell Steel explained that its insurers require full payment at the beginning of each coverage year - money that Powell Steel now lacks.

However, U.S. Premium Finance has agreed to pay the $142,000 owed by Powell Steel on its general liability and commercial vehicle policies.

Powell Steel will repay U.S. Premium Finance with a down payment and seven monthly payments, plus $1,300 interest.

The agreement is subject to the approval of U.S. Bankruptcy Judge Magdeline D. Coleman.

In the second challenge facing the company, Coleman ruled that Powell Steel's landlord may evict the company for unpaid rent.

Whether landlord Fisher Realty will use that authority is unclear. For now, Powell Steel remains in its Pequea Township site.

In a recent interview, Fisher Realty attorney Susan Peipher said only, "I really can't get into what my client's strategy will be."

Steve Powell, president and founder of Powell Steel, and Nicole Nigrelli, bankruptcy attorney for Powell Steel, could not be reached for comment.

Powell Steel last paid rent in May, court filings show.

The current rent was not disclosed in the court papers, but the lease began in 1994 at $17,500 per month.

Powell Steel also hasn't paid property taxes owed as part of its rent and missed a deadline for telling the court whether it wants to stay on the site.

Powell Steel filed for bankruptcy reorganization in February, after defaulting on $3.2 million in loans from M&T Bank.

At that time, Powell Steel reported annual sales of $14 million and 75 employees.