Obetz family squabbles with bankruptcy trustee over 17 properties

Worley & Obetz Inc. was headquartered in Manheim before the energy company filed for bankruptcy earlier this summer. - (Photo / Submitted)

A dispute between the trustee overseeing the Worley & Obetz Inc. bankruptcy estate and the Obetz family played out in bankruptcy court filings earlier this week.

The Obetz family is pushing back against efforts by bankruptcy trustee Christine Schubert to sell several of their properties to help pay Worley & Obetz’s $90.1 million in debt, according to the filing.

No legal action has been filed by the trustee to take control of any of the properties.

Included in the real estate portfolio are 17 properties: Nine in Manheim, where the energy company was based; one in East Lampeter Township; one in Maryland; one in Delaware; and five in Bradford County, where Worley & Obetz’s propane subsidiary, Value Energy North, was headquartered. 

The Penn Township-based energy company filed for chapter 7 bankruptcy on June 6, two days after the company and its subsidiaries shut down abruptly amid news of an investigation into alleged fraud.

In August, Worley’s former CEO, Jeffrey B. Lyons, and its former controller, Karen Connelly, were charged by the Northern Lancaster County Regional Police for alleged fraud. The investigation is ongoing. 

Soon after, an energy company bid $8.1 million to buy Worley & Obetz out of bankrutpcy – a fraction of what is owed to the company’s creditors.

Since June, Schubert has been actively trying to find a way to pay off the company’s many debtors, including four Pennsylvania banks.

And selling the Obetz family properties may help her cause.

Schubert’s attorney in August, the filing read, told the Obetz family’s attorney that she believes the properties were “acquired through the use of company resources and, as such, were effectively estate property.”

But Seth the co-owner of Worley, Melissa and Molly Obetz, another co-owner – Seth Obetz’s wife and sister respectively – said that’s not the case.

In the filing, the Obetz family argued that the properties were purchased solely with personal funds “well before any time period which is subject to the trustee’s avoidance power under the bankruptcy code or state law.”

They also said that Schubert’s conclusions about the properties are either “uninformed” or that she and her professionals have failed to perform a sufficient forensic analysis.

The family has requested a court order directing Schubert to produce all information in her possession, including an insolvency analysis. They have also requested for her to appear in court.

A hearing is scheduled Oct. 11 before Jude Richard Fehling in the U.S. Bankrutpcy Court for the Eastern District of Pennsylvania in Reading.

The Obetz family attorney, Jeffrey Kurtzman of Philadelphia law firm Kurtzman Steady LLC, was not immediately available for comment.

Shelby White
Shelby White covers banking and finance, law and Lancaster County for the Central Penn Business Journal. For tips, email her at swhite@cpbj.com.

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