SHENANGO VALLEY — No matter where you stand, the discovery of lost funds from Sharon Steel Corp. has gotten better — and worse.

In November it was revealed $490,000 in funds from the defunct Farrell steelmaker was discovered and since then an additional $42,000 has been found. A judge has since ruled the steelmaker’s long-closed bankruptcy case be reopened to divvy up all the money.

For former Sharon Steel employees this sounded like a dream as a number of them thought a slice of the loot would be poured into their laps. But that is now facing steely odds as all the money could be burned up in attorneys’ fees — provided it ever gets released.

That has Gene Bianco fired up hotter than a blast furnace.

“We need to raise some hell about this,’’ said Bianco, the last president of the main United Steelworkers local which represented most of Sharon Steel’s workers. “The union needs to go to court and find out what’s going on.’’

A challenge awaiting everyone is the Pennsylvania Department of Treasury’s Bureau of Unclaimed Property refusal to hand over the $490,000 sitting in its coffers. The bureau is responsible for holding lost or unclaimed assets until the proper owner is found.

At some point in the 1990s, UV Industries, a company owned by Sharon Steel, issued a check to the Pension Benefit Guaranty Corp. which was one of the steelmaker’s creditors. Believed to be part of a settlement, the PBGC, a quasi-government insurer of the nation’s pension plans, gained oversight of Sharon Steel workers’ under-funded pension plan during the company’s second bankruptcy.

PBGC eventually decided not to accept the funds which were deposited at the state Treasury Department. Unknown to anyone involved in Sharon Steel’s bankruptcy, the money sat at the state agency for years until discovered late last year.

Initially Phil Beard, a Pittsburgh attorney representing creditors in both Sharon Steel’s bankruptcies, thought the funds could simply be transferred into the company’s estate but the Treasury Department balked.

No one has “provided sufficient documentation to the Bureau of Unclaimed Property to prove ownership of the assets,’’ a Treasury Department spokesman said.

A motion was filed by Beard to reopen the steelmaker’s bankruptcy case, which was approved by Judge Warren W. Bentz, who sits in U.S. District Bankruptcy Court in Erie. Bentz oversaw both of Sharon Steel’s bankruptcies.

With the case reopened, Beard filed a suit against the Treasury Department to get the agency to fork over the money. A hearing on the suit is scheduled today before Bentz.

In conversations with state officials, Beard said the Treasury Department is demanding a copy of the purchase agreement which shows Sharon Steel bought UV Industries, which happened more than 30 years ago.

“We don’t even know who handled the sale or where such a document might be,’’ Beard said. “In past rulings by the U.S. Circuit Court, they made statements in their opinions that UV Industries was a wholly-owned subsidiary of Sharon Steel.’’

Further searches for other lost funds found an additional $42,000 sitting in a UV account in Utah where the company had a mining interest, Beard added. If all goes well at today’s hearing the judge will rule all the funds belong to the Sharon Steel estate, he added.

For employees, though, there is a hitch. Even if the court OKs the motion, attorneys who oversaw the steelmaker’s bankruptcy contend the money belongs to them. Beard said he is owed $40,000 in unpaid fees from the second bankruptcy and one of the company’s attorneys had $400,000 in fees owed to him.

Jim English, a USW attorney, isn’t quite sure what to make of the situation. “I’m surprised to hear the administrative costs in the bankruptcy weren’t paid in full,’’ English said.

There’s no doubt administrative costs such as a finder’s fee will be taken out of the newly discovered money along with other administrative costs, English added. But he isn’t sure what will happen with the remainder of the funds.

Sharon Steel still holds deep memories locally as it was among the last industrial employers that had thousands on its payrolls. During its final days the steelmaker’s 2,700 employees made it Mercer County’s largest employer.

Tracing its roots back to the 19th century, Sharon Steel had a number of owners over the years and was mired in debt after being taken over by the late financier Victor Posner. Sharon Steel filed for Chapter 11 bankruptcy in April 1987 and chunks of the steelmaker were sold to pay off creditors, but its main steel plant in Farrell was snapped up by New York investment firm Castle Harlan Inc. Struggling in steep downturn in the steel market, the company entered its second Chapter 11 bankruptcy in November 1992, with the mill closing later that month. Castle Harlan tried reopening the plant but the bankruptcy court refused, saying the mill wasn’t able to turn a reasonable profit.

At that point Sharon Steel closed permanently and began selling its assets to pay off its secured lenders. The Farrell plant has since been sold a couple of times and now operates as Duferco Farrell Corp. Duferco is not involved with the ongoing legal case.

Former Sharon Steel workers remain hopeful of getting some of the newly discovered money. A Sharon Steel Club composed of former employees who go on short bus trips and have other activities might be a good place for the funds, Bianco said. “I bump into former workers all the time who ask where the money is,’’ he said. “I tell them if we win anything it won’t be too much.’’