Steve Powell
More than $6 million in debt, Powell Steel has filed for bankruptcy reorganization, according to court records.
The Pequea Township business filed on Feb. 13 under Chapter 11 of the bankruptcy code.
That means the company continues to operate as it devises a way to repay a portion of its debts.
Powell Steel, 625 Baumgardner Road, is led by Steve Powell, its founder, chairman and president.
He's perhaps best known as the coach of the McCaskey High School boys' basketball team.
"We don't want people to think we're closing our doors," said Nicole Marie Nigrelli, a Powell Steel bankruptcy attorney.
"It's a viable business, a good business. They've been praised for their work.
"With a little reprieve from pressuring creditors and a plan to move forward, they intend to reorganize."
Nigrelli said Powell Steel was hurt by a decline in sales triggered by the ongoing slump in commercial construction.
As a result, she said, Powell Steel could not pay its bills as they came due.
"The decline in the economy made it hard for them, just like with many businesses," Nigrelli said.
Likewise, Powell Steel was hurt by customers not paying what they owed to the company. Powell Steel has $3.1 million in accounts receivable.
Powell could not be immediately reached for comment.
Powell started the company in 1993 by purchasing the assets of his bankrupt former employer, Fisher Steel.
He had been Fisher Steel's director of administrative services.
Powell opened with eight employees and reported first-year sales of $2 million.
Powell Steel now has 75 employees and annual sales exceeding $14 million, according to its bankruptcy court filings.
But those figures represent a significant decline.
According to its website, Powell Steel used to have more than 80 employees and annual sales of more than $20 million.
The company describes itself as a "progressive" firm that uses "state-of-the-art" equipment to fabricate and erect structural steel.
Its steel forms the skeletons of dozens of schools, hospitals, bridges, factories, jails and other types of structures in six states.
Locally, these include the McCaskey East building, Fackenthal Hall on the Franklin & Marshall College campus and the R.R. Donnelley expansion on Greenfield Road to accommodate printing of Reader's Digest.
According to its bankruptcy filings, Powell Steel's biggest debt is $3.8 million owed on loans from M&T Bank.
Powell Steel also owes $194,000 on a loan from the Pennsylvania Minority Business Development Authority.
In addition, the company owes taxes to an array of government and school entities.
Powell Steel owes the Internal Revenue Service $834,000 in "unpaid but withheld" payroll taxes.
Likewise, it owes the state Revenue Department $133,000 in "unpaid but withheld" payroll taxes.
Powell Steel's filings do not address what happened to those withheld but unpaid sums.
The company also owes $34,000 to Lancaster city (payroll taxes), $48,000 to the Maryland Revenue Department (various taxes) and $20,000 to Penn Manor School District (real estate taxes) .
Other major sums owed include $182,000 to Powell Steel's landlord, Fisher Realty, and $659,000 to a supplier, Infra-Metals.
Powell Steel has yet to file the complete detailed lists of assets and liabilities required by the bankruptcy code in the first two weeks of a case. It has requested an extra 15 days to do so.
