YOUNGSTOWN — The financial situation at SOBE Thermal Energy Systems LLC, which is supposed to provide heat for most of downtown Youngstown, is so precarious that it had to receive a court order to hold off on paying $55,570 owed to its former receiver and attorney.

“The finances are not good,” said John C. Collins, SOBE’s current receiver.

Collins said: “If we paid the $55,000 all at once, it could hurt the company financially. It could impact our ability to pay other expenses. $55,0000 would be a lot of money at this time for the company to pay.”

The ousted previous legal counsel, Kenneth R. Goldberg, objected to a request by Michael J. Moran, a Cuyahoga Falls attorney serving as SOBE’s legal counsel, to delay paying him $20,324.50 as Goldberg’s final payment for three months of work and $35,246.20 to Reg Martin, removed Feb. 17 as SOBE’s receiver, as his final payment for less than three months of work.

Mahoning County Common Pleas Court Judge Anthony Donofrio authorized the payments in a March 25 ruling, giving SOBE 45 days to make the payments, which would be May 9.

In a Thursday judgment entry, Donofrio gave SOBE until June 29 to pay the outstanding bills.

Collins said: “Hopefully, we can pay it by then.” Then he said: “We’ll comply with an order from the court.”

In an April 2 motion to modify the order, Moran asked that instead of 45 days, SOBE be given time to pay the two when the funds become “available and can be paid from funds not reasonably necessary for the ongoing business operations.”

In that request, Moran said just the bill to Enbridge Gas Ohio for December, January and February exceeded the amount of money SOBE currently had or “reasonably likely to be obtained within a 60-day period.”

Moran also wrote a payment is owed to Power Mechanical Inc., a Newport News, Virginia, company, for the rental of a boiler unit by Martin, and Collins has “ongoing obligations to pay employee wage claims and utility payments to other providers and further to pay ongoing gas supply purchases which, in the opinion of the receiver, will probably exhaust available funds.”

In response, Goldberg filed an April 8 request for a lien against the troubled utility.

On April 15, Goldberg filed a motion opposing Moran’s request for a delay in the payments and that Collins “incorrectly claims or suggests that the outgoing receiver did not pay ongoing receivership expenses as they were incurred. It is respectfully submitted that the outgoing receiver was current on all ongoing receivership expenses, except for one month of the gas supplier expenses. To claim otherwise is mistaken.”

Goldberg added: “In this case, there has been no change in circumstances which would justify a modification of court’s entry granting of the outgoing receiver’s fees made pursuant to the agreed judgment entry. A receiver is entitled to reasonable compensation for services rendered, and the trial court’s discretion in approving such fees is generally upheld absent an abuse of discretion.”

In his Thursday ruling, Donofrio said that the 45-day deadline would “create a serious financial hardship” for SOBE “given the financial position of the business.”

Donofrio wrote: “The court in balancing the necessity of providing a definite timeline for the satisfaction of this obligation and the financial impact the business may suffer, hereby modifies the prior entry and provides the successor receiver an additional 60 days from the date of this entry to pay the final fees and costs to the outgoing receiver and his counsel.”

Donofrio on Sept. 26 appointed Martin as SOBE receiver and Goldberg as his legal counsel at the request of the Public Utilities Commission of Ohio as the company was insolvent and unable to provide heat to its customers. A rented 800-horsepower boiler was repossessed Sept. 30 from SOBE because the company defaulted on paying for the equipment that provided heat and hot water to its 28 downtown Youngstown customers. That resulted in SOBE abandoning the city.

SOBE owed $383,214 in back payments to the steam plant’s owner, Wabash Power Equipment Co. of Wheeling, Illinois. The repossession would have made the company unable to provide utilities to its customers.

But the equipment rented by Martin proved to be unreliable during the winter months.

SOBE’s boilers repeatedly failed to provide proper heat and hot water for its customers, forcing a number of them to shut down.

In a Jan. 29 court filing, Goldberg blamed the problems on SOBE’s customers. The customers strongly denied that.

Several buildings were without heat for five days, starting Feb. 7, after the failure of two SOBE boilers, including an 800-horsepower one that arrived Feb. 1.

That came only days after SOBE couldn’t provide heat from Jan. 27 to Feb. 2, and Feb. 3 in some buildings, during days when the temperature was well below zero. Even after steam heat started flowing, some businesses couldn’t get it because of broken pipes.

Without the repossessed boiler, Martin was able to rent a 650-horsepower steam plant that was hooked up about 10 days after the other was taken away.

Because of the $750,000 Martin received from Enbridge as part of the company’s settlement of the 2024 Realty Tower gas explosion investigation by the PUCO, he was able to rent a 200-horsepower boiler.

Martin also used the Enbridge settlement money to rent an 800-horsepower boiler, which arrived Jan. 30. But that and the 650-horsepower boiler failed Feb. 7 with heat not restored to buildings until Feb. 12.

When Martin took control of the company, he said it owed millions of dollars in unpaid bills and could go out of business.

Numerous customers criticized Martin for being unresponsive and not doing enough to get heat to buildings during the coldest periods of the year.

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 Moran to replace Goldberg.

FINAL BILL

Once the final payments are made, Martin will receive $80,050.05 and Goldberg will get $42,224.50 in total for five months of work for SOBE that included obtaining three boilers – all of which failed at various times, including all at once, to provide proper steam heat and hot water for much of downtown Youngstown.

Martin was paid $200 an hour and Goldberg $375 an hour. Collins is receiving $300 an hour and Moran is getting $350 an hour.

Collins has not submitted a request for payment as of Friday to Donofrio for himself and Collins.

Martin’s final bill request of $35,246.20 was for the period between Dec. 1 and Feb. 26 as he was permitted to stay on the payroll during the transition.

Martin listed 163.5 hours of work at the $200-an-hour wage as well as 24 hours of “office work” for his company at $45 an hour. He also received 70 cents a mile for one trip to Youngstown from his Columbus-area home during the three-month period, one trip to Youngstown that he failed to include on a previous request for payment and a drive to Virginia to look at a boiler at Power Mechanical Inc., which is leasing all three boilers to SOBE.

Martin’s itemized billing included expenses for searching for the boilers, setting up a bank account, discussing a $750,000 payment he received as receiver from Enbridge, email and text message exchanges, and reading articles in The Vindicator. Martin’s last conversation with a reporter from The Vindicator was Oct. 31. After that, he refused to respond to numerous requests to comment.

Martin also billed for receiving numerous calls and emails from SOBE customers about the company’s repeated issues that resulted in no heat for days, including when temperatures dropped below zero degrees.

Martin’s bill including seeking payment for “customer complaints out of hand” on Feb. 3. Two days later, he charged for suggesting “an independent expert, if needed, to counter misinformation from customer.” On the same day, he wrote on his bill: “Due to continued level of unfounded derogatory comments from the public, I question (my) continuance in case despite that it all stems from boiler problem over the last three months.”

On Feb. 13, he billed for reading articles in The Vindicator about his removal as receiver as well as for texting and calling Goldberg asking that changes be made to indicate it was a resignation and not a termination.

The motion from an Ohio assistant attorney general representing the PUCO states Martin was being “removed and replaced,” and that he “agreed to resign.”

Goldberg’s final bill of $20,324.50 is for 54.2 hours of work from Nov. 25 to Feb. 23.

Goldberg billed for work on the Enbridge agreement, talked with PUCO officials, Martin – including to discuss complaints from customers – as well as for preparing court documents, working out Martin’s resignation and a total of $262.50 to review three Vindicator articles about what was happening with SOBE.