Despite ongoing bankruptcy proceedings involving the company, Information Technology Procurement Sourcing continues to provide services to at least one Butler County school district.

The proceedings are ongoing as two former employees earlier this month were charged — one with financial theft and forgery and the other with forgery — while working there.

The company sought Chapter 11 bankruptcy protection in January, according to documents filed in the U.S. District Court of Western Pennsylvania in Pittsburgh.

As part of the initial bankruptcy filing, the company filed a motion for an automatic stay and contempt against the Karns City Area and Mars Area school districts. The company provided on-site IT services for Karns City, and remote managed and on-site services for Mars.

Documents indicate Karns City's contract runs until December 2020, while Mars' expires June 30, 2021. The company argued the contracts required quarterly payments made prior to service being rendered, and the filing notes both districts were current with their payments.

That changed in December after the districts learned of bankruptcy proceedings, with each district wishing to no longer pay in advance, the filing states.

Documents indicated Karns City was invoiced for $71,875, while Mars was charged $156,211 for the first quarter of 2019. The company requested emergency relief, and the filing indicated its 13-week cash flow relied upon receiving the payments.

Attorneys for Karns City and Mars responded days later, writing that the agreement does not stipulate the district pay in advance for services. Rather, it indicates the district would be invoiced for “services provided” rather than “services to be provided.”

A consent order of the court was approved by Chief U.S. Bankruptcy Judge Carlota Bohm, with Karns City agreeing to pay $49,354.17 that day, and the remaining balance of $24,677.08 to be paid by the end of February.

Mars agreed to pay $104,140.66 that day, with a remaining $52,070.34 to be paid by Feb. 28. Both February payments were to cover service provided in March.

ITPS agreed to “continue to provide the same level of services” until March 31. The districts were given the option to recoup all money paid for services not rendered if the company ceased operations before that date.

According to a monthly operating report filed last week in the case documenting the company's financial status as of June, Karns City was scheduled to pay $74,031.25 on July 1, while Mars was scheduled to pay $106,223.48 that same day. Marsalso is listed as having a payment of $53,111.74 due on Sept. 1.

Mars Area Superintendent Wesley Shipley confirmed that the district continues to receive technology support services from the company.

“Their on-site employees have been fulfilling the requirements of the contract, and have been doing a very good job,” Shipley said via email. “I have no issue with the service we have been receiving.”

The district's contract with ITPS was a topic of debate last summer, when residents took issue with board member William Pettigrew and solicitor Tom King's relationship with the company. King provided legal advice to the company in the past, and Pettigrew served as a consultant. Both said they disclosed their relationships before discussions and abstained from matters involving the company.

After questions about the company's stability from residents, company officials — including CEO Dan Bunner — in September responded at a board meeting. They dismissed and challenged accusations, saying the company was on stable financial ground.

Officials at Karns City Area School District did not return calls seeking comment. Documents did not indicate other districtsto which the company might have provided service.

As of Friday afternoon, the company's website did not return search engine results, and the listed phone number was disconnected. However, archived posts on the company's Facebook page indicate service agreements with the Harmony Area School District in Indiana County and the Mercer Area School District in Mercer County.

Meanwhile, the list of other creditors includes Cranberry Township-based Lefcon LLC for $72,451.25 in trade debt; Stepanian & Menchyk LLP of Butler for $7,600 in legal services; and Dillon McCandless King Coulter & Graham for $7,118.55 in legal services.

The list also includes an undisclosed amount of disputed trade debt from Eric V. Cunningham, the former CEO.

Cunningham, 47, of Gibsonia was charged last week in Allegheny County with three counts of theft by unlawful taking, receiving stolen property and forgery.

He allegedly received more than $205,000 in bonus and commission payments from the company while serving as CEO. He alsoallegedly used the company's credit card to pay for trips associated with a youth basketball team and other expenses.

Jerry Carrel, 41, of Marsallegedly processed those payments, according to court documents. However, he is charged with forgery in a separate case discovered during the investigation in which he allegedly filed false paperwork in a non-payment of wages claim with the state for more than $63,000. He waived his preliminary hearing Wednesday, and the case was transferred to Allegheny County Common Pleas Court.

Cunningham's role in the company became part of bankruptcy proceedings in March.

According to the bankruptcy filings, Cunningham was terminated as CEO on July 3, 2018, and on July 31 the company commenced litigation against him in Allegheny County Common Pleas Court. The outcome of that case would “impact the direction” of the bankruptcy proceedings, the filing states.

Cunningham had objected to the original common pleas court filing, citing a lack of jurisdiction as well as the inclusion of “scandalous and impertinent material.”

Documents indicated Cunningham had filed a separate complaint against ITPS and company officers in Butler County Common Pleas Court in August 2018. Those proceedings were on hold after ITPS filed forbankruptcy.

At a hearing in May, counsel for all parties agreed to consolidate the individual claims, and permit the bankruptcy court to resolve all of them. Cunningham was given until June 28 to file a response, and attorneys agreed to discuss an “amicable resolution” in the interim.

On July 1, ITPS requested a default against Cunningham after he failed to file a response. Bohm denied that motion on July 17, and instead gave Cunningham until Friday to file a response, with failure to comply possibly resulting in a default judgment. Court records showed no such filing as of Friday afternoon.

Meanwhile, the company recently asked for an extension in which to file a Chapter 11 plan. It noted a plan is “substantially drafted” which contemplates a sale of “substantially all” of the company's assets through a public auction. The plan was originally scheduled to be completed by July 8.

A hearing on the matter is scheduled for Aug. 8.