YOUNGSTOWN — The receiver for SOBE Thermal Energy Systems LLC, which is supposed to provide heat for most of downtown Youngstown, wrote in a court document that the company is on the verge of a financial collapse.

John C. Collins, SOBE’s receiver, wrote the “company is in the midst of a financial crisis” and will no longer be able to pay for three rented boilers it uses to operate by September or October in a Wednesday report to Mahoning County Common Pleas Court Judge Anthony Donofrio.

Unless SOBE gets a cash influx by the state or another party agrees to pay for the reconstruction of the former location of the demolished steam plant boilers or a buyer is found, “SOBE Thermal will no longer be able to operate and the customers of SOBE Thermal may be without steam heat,” Collins wrote.

An Akron lawyer, Collins paints a bleak picture of SOBE’s finances in Wednesday’s court filing, his first since his Feb. 17 appointment as receiver.

Collins said SOBE’s monthly income is about $130,000 while its monthly expenses are about $220,000.

Its regular expenses for payroll and materials is about $80,000; rent for three boilers to provide heat to its customers paid to Power Mechanical Inc. of Newport News, Virginia, is $58,200; and “anticipated monthly payments” to Enbridge Gas Co. for gas is $80,000, Collins wrote.

The Enbridge monthly bills haven’t been paid in months – Collins didn’t give a specific date except that it was prior to the court case filed in September by the Public Utilities Commission of Ohio against SOBE — and could be as much as $1,999,656.95 and growing.

Collins wrote he filed a complaint with the PUCO against Enbridge questioning the accuracy of “an unprecedented spike in service charges for the month of January compared to previous months,” and asked the PUCO to prohibit Enbridge from terminating its natural gas service prior to the resolution of the dispute.

In the report, Collins wrote that at a May 20 status hearing in front of a PUCO administrative law judge, an agreement was reached with “Enbridge significantly reducing the amount it is claiming as an arrearage and also would include the possibility of (SOBE) paying the arrearage, which will still be in excess of $500,000, over an 18-month period.”

Collins wrote SOBE is in the “midst of a financial crisis” because David Ferro, the company’s CEO, decided in 2022 to scrap three coal-fired and one gas-fired boiler at the Youngstown location, 205 North Ave., and raze the boiler house “leaving in its place a massive hole in the ground, and he took no steps to remediate this potential nuisance.”

In 2019, Ferro, who has since walked away from SOBE, entered into a lease agreement with Wabash Power Equipment Co. of Wheeling, Illinois, for an 800-horsepower boiler to provide heat to customers. After months of SOBE not paying for the boiler — and owing $383,214 in back payments — Wabash repossessed the boiler on Sept. 30, leaving SOBE without any way to provide steam heat to most of downtown.

With the company owing about $4 million to creditors, Ferro abandoned the company’s Youngstown facility.

Donofrio on Sept. 26 appointed Reg Martin as SOBE receiver and Kenneth R. Goldberg as his legal counsel at the request of the PUCO as the company was insolvent and unable to provide heat to its customers.

Martin rented three boilers from Power Mechanical at a monthly cost of $58,200. But numerous problems with the boilers caused them to not provide heat during periods in January and February, when temperatures were below zero.

Martin used $750,000 he received from Enbridge as part of that company’s settlement of the 2024 Realty Tower explosion to rent two of the boilers.

Collins, who replaced Martin, wrote in Wednesday’s report to Donofrio that there is only enough money left in that fund to pay the rental fees to Power Mechanical until September or October.

Collins wrote that a number of SOBE’s customers are delinquent with their bills.

Collins spent $39,364.60 for new meters at four businesses to get a more accurate reading of their heat usage as the current meters are old and likely inaccurate with no meters at all for some customers. He plans to get new meters for five other buildings.

Collins wrote that Ferro signed contracts with five businesses without getting approval from the PUCO so he is seeking approval from the agency for an increased rate for steam heat on the buildings. Those buildings are Oh Wow! The Roger & Gloria Jones Children’s Center for Science & Technology, the Nathaniel R. Jones Federal Building through the General Services Administration, WesBanco Bank, Erie Terminal Place and First National Bank.

Collins wrote: “What is absolutely required in order to give SOBE Thermal an opportunity to become a viable business entity is a complete reconstruction of the entire steam plant, including the acquisition of permanent boilers.”

Collins wrote Youngstown Mayor Derrick McDowell contacted Gov. Mike DeWine’s office with “a request that the state of Ohio consider any and all options to provide funding for the cost of the steam plan distribution reconstruction.”

Not included in the request, Collins wrote, “is any kind of funding to the receiver for operating costs and expenses. Unless the receiver is provided funds earmarked for operating expenses by the early fall, the company will not be able to continue to provide services to the customers of downtown Youngstown. If the state of Ohio would consider funding the steam reconstruction, the receiver would hope that that grant of funding includes monthly operating expenses sufficient to continue to operate the business until the reconstruction is complete.”

The report doesn’t indicate how much a potential steam reconstruction would cost or how long it would take to install.

Donofrio on Feb. 17 granted a PUCO motion to remove Martin as SOBE’s receiver. The PUCO request came Feb. 11.

Donofrio also granted requests from the PUCO on Feb. 17 to appoint Collins to replace Martin and for Michael J. Moran, a Cuyahoga Falls attorney, to replace Goldberg as the company’s legal counsel.

Goldberg objected to a request by Moran on behalf of SOBE to delay giving him $20,324.50 as his final payment for three months of work and $35,246.20 to Martin as his final payment for less than three months of work.

Donofrio authorized the payments in a March 25 ruling, giving SOBE 45 days to make the payments, which would have been May 9.

In an April 30 judgment entry, Donofrio gave SOBE until June 14 to pay the outstanding bills because SOBE was unable to pay the two.

Collins and Moran are supposed to be paid $300 and $350, respectively, per hour. Collins’ Wednesday filing didn’t include the fees the two have compiled since taking over SOBE.