SUNBURY - Less than 24 hours before it was scheduled to be sold to the highest bidder, a sheriff's sale on the Center City Apartments was postponed because the disputed owner filed for bankruptcy.

Northumberland County Judge Charles H. Saylor ordered the stay Wednesday afternoon after receiving notification that Red Gold Enterprises Inc., a Shamokin company owned by Eugene Picarella, filed for bankruptcy in U.S. Middle District Court under Chapter 7 of the U.S. Bankruptcy Code.

A secretary from Saylor's office could not give the date when Red Gold made its filing, and the information could not be found on PACER, a government website that acts as an index for U.S. District, Bankruptcy, and Appellate courts, but said notification of the filing was sent to the judge at 2:45 p.m., less than 24 hours before a sale of the former James Madison Hotel, 612 N. Shamokin St., Shamokin, was scheduled to be held in the Northumberland County Sheriff's Office.

Shamokin Housing Authority Board president Raymond G. Splane chuckled upon hearing the news of Saylor's order, but then said the sale will happen in the near future.

"We will get our lawyers to work on it, but as far as I can see, we are the only secured debt he has," Splane said. "This might delay the sale a month or two, but the property will be sold."

According to a bankruptcy code explanation on the U.S. Courts website, the Chapter 7 petition filing automatically stays, or stops, most collection actions against the debtor and the property.

The filing also temporarily ties the hands of the Shamokin Housing Authority from collecting on the 1988 mortgage, originally from the Pennsylvania Housing Finance Agency, that has not been paid on since 1998.

"As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor," the website reads.

Sale was set for today

The sale was scheduled for today. The state Supreme Court issued a decision on June 13 not to reconsider their affirmation of Saylor's 2010 ruling on the validity of more than $1 million allegedly owed on a mortgage on which the company has not made a payment since 1998. The company claims the mortgage, which enabled Red Gold to purchase the former James Madison Hotel in Shamokin, is invalid because a 2000 foreclosure action was dismissed with prejudice in 2004, meaning that the action cannot be revived in court.

In 2009, the Pennsylvania Housing Finance Agency turned the mortgages over to the Shamokin Housing Authority, which was the plaintiff in the court case.

In 2010, Red Gold appealed to the Pennsylvania Superior Court, which upheld Saylor's ruling that the mortgages are valid. Red Gold, owned by Eugene Picarella, filed a subsequent appeal with the Pennsylvania Supreme Court, which denied a Feb. 23, 2012, motion to hear that appeal. The company appealed again March 7.

Wednesday's court order marked a third time a scheduled sale of the property had either been cancelled or postponed.

On July 21, 2009, a month before the property was set to be sold at a county judicial sale, Red Gold paid $76,000 in back property taxes. With that, the company said it had reclaimed ownership of the property and the right to collect federal rent subsidy payments, which the housing authority had been withholding due to federal law stating they cannot pay federal funds to someone delinquent in taxes.