U.S. District Judge Margaret Seymour ruled that the workers who lost their jobs when the plant closed May 4 acted in contempt of her May 22 court order appointing a receiver when, through their Augusta attorney Jack Long, they filed a petition for involuntary bankruptcy.

Judge Seymour of the Spartanburg Division said she had jurisdiction over the case and has the power to stop the bankruptcy action. She accused Mr. Long of trying to go around her by filing the petition in U.S. Bankruptcy Court in Augusta.

King Mill's parent company, Spartan International in Spartanburg, closed six mills May 4 in Georgia, South Carolina and North Carolina when their assets were seized by the company's primary lender, General Electric Capital Corp. Overall, 1,200 employees lost their jobs, retirement funds and health-insurance benefits.

Without the bankruptcy proceedings, the employees have little chance of recovering anything from the company.

On Monday, Judge Seymour ruled that her court has the power to stop the bankruptcy proceedings. She found that the restraining action was necessary to keep all of Spartan's 6,500 creditors from converging on the assets at once.

Judge Seymour also found that the workers did not prove they would be paid before or instead of other creditors. She also found that Peter Tourtellot, the appointed receiver, did prove that the assets would be in danger by the bankruptcy action.

Judge Seymour wrote that public interest favored the receiver.

The judge said the workers through their attorney sought relief in what they perceived to be a more favorable environment.

In May, Judge Seymour appointed Mr. Tourtellot to oversee the disposition of Spartan's assets. Mr. Tourtellot negotiated the sale of King Mill to Spartan's largest customer, Standard Textile, for $4.1 million. Standard subsequently hired 191 people and resumed operations Monday. Of those, 180 were former King Mill employees.

Forty-eight of the 306 King Mill employees who were thrown out of work filed an involuntary bankruptcy petition in Augusta on May 31, after Judge Seymour's order appointing Mr. Tourtellot was filed with the federal court in Augusta.

The workers are seeking medical insurance benefits for 60 days, benefits they would have been entitled to under federal labor law except that Spartan was self-insured. When the company folded, the insurance program ceased to exist, according to testimony.

The employees also were deprived of the required 60 days' notice that they would lose their jobs.

At no point did the former King Mill employees or their attorney seek legal relief in her courtroom, Judge Seymour wrote.

During a three-hour hearing in Spartanburg on Monday, Mr. Long noted that almost all of the money Mr. Tourtellot has collected has gone to GE, including the $4.1 million from the sale of King Mill. The Augusta Canal Authority paid $200,000 for the land and buildings, which it is leasing to the company.

''You understand that the way things are going there's not going to be any money left,'' Mr. Long said.

Mr. Long also contended that under Georgia law GE will be allowed to add as much as 15 percent of $35 million for attorney fees.

Mr. Tourtellot's attorney, Michael M. Beal, argued that ''irreparable harm'' would result if the bankruptcy case is allowed to proceed.

Reach Sylvia Cooper at (706) 823-3228 or sylviaco@augustachronicle.com.

Reach Sandy Hodson at (706) 823-3226 or shodson@augustachronicle.com.