Customers of Bankrupt Hamburg, N.Y.-Based Energy Firm Must Wait for Refunds David Robinson , The Buffalo News, N.Y. ( November 03, 2000 ) Nov. 2--The people who had hoped to save money on their heating bills by buying from Iroquois Energy Management will have to wait until next year to get back the $1.8 million they paid in advance, because the company has filed for Chapter 11 bankruptcy protection. The bankruptcy filing will affect those who paid in advance and those with credit in their accounts from the balanced-billing program, an attorney for the  company said Wednesday. Because the deposits from Iroquois' former residential customers are given priority status by federal law, those claims must be repaid in full for the company to successfully reorganize its finances, said the attorney, William F.  Savino. But Savino said it is expected to take at least three months before a  reorganization plan can be prepared and confirmed by the court, which means that  it would be early next year, at the earliest, before the deposits could be refunded. Iroquois' bankruptcy filing on Tuesday indicates that the company owes more  than $5 for every $1 that it has in assets. The company has $2.89 million in  assets and $16.3 million in liabilities, $7.3 million of which is unsecured. In addition to the nearly $1.8 million owed to its former residential  customers, Iroquois owes its commercial customers $9,600 in deposits. "When Iroquois exited the residential market, it indicated it could return the prepayments," said Edward Collins, a spokesman for the state Public Service  Commission. "The commission's goal continues to be the return of customer  prepayments, and staff is working to achieve that goal." National Fuel Gas Co. is Iroquois' biggest creditor, with $4 million in  claims outstanding against Iroquois. Part of that claim -- $2.33 million that is  owed to National Fuel's utility business -- is backed by a surety bond, said Julie Coppola Cox, a spokeswoman for Buffalo-based National Fuel. The bankruptcy filing caps a difficult month for Iroquois, which voluntarily dropped out of the residential gas business on Oct. 13 and lost its nearly 1,400 small commercial customers last week after failing to meet their needs. Iroquois is appealing a PSC ruling that allowed National Fuel to bar it from delivering gas to its customers over the utility's gas lines. Under the rules of  the state's deregulated natural gas market, National Fuel is required to make up any shortfalls in gas deliveries and prevent customers from being left without  gas. Iroquois' residential and small commercial customers have had their accounts switched back to National Fuel without disruption. They now are being charged the utility's standard rates. Iroquois officials said the company will continue to focus on its remaining  big industrial and institutional customers as it tries to restructure its  business. The company, which now has 16 employees, has trimmed its staff by about 40 percent, said Daniel F. Brown, another attorney for Iroquois. "It became necessary for us to become a smaller business focusing on the large commercial-, industrial- and institutional-end users that have been our  traditional core business," said Theodore K. Kurtzman, president of Iroquois. Iroquois officials have blamed the company's troubles on a severe cash crunch  caused by this year's surge in natural gas prices, which have more than doubled. This price spike made it more expensive to secure the natural gas it needed. "The disruption in the fuel markets and the spiking natural gas prices hit marketers like Iroquois particularly hard," said John Howe, executive vice president for Iroquois. "To avoid being caught between escalating fuel prices  and various fixed contracts, Iroquois needed to seek court protection."