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Pittsburgh Brewing Co., the 144-year-old maker of local staples such as Iron City and I.C. Light beers, filed for bankruptcy Wednesday morning to keep the city from shutting off its water supply.

Jim Sauro, an 18-year veteran of the company, came to work yesterday expecting just another day of meting out yeast to make the Lawrenceville brewery's beer alcoholic. Instead, around 3 p.m. he found himself listening to his boss, company co-chairman Joe Piccirilli, explain why Pittsburgh Brewing can't pay its bills.

Piccirilli said the plant will continue brewing beer and will do all it can to avoid laying off any of its 200 employees.

"It's heart-wrenching," said Sauro, 44, of Brentwood. "There's too many good people who work here."

Pittsburgh Brewing filed the emergency petition with the bankruptcy court in Pittsburgh because the Pittsburgh Water & Sewer Authority sent a notice Monday threatening to cut off water lines leading to the building.

Without water, the company can't make beer, and its million-dollar boilers could "melt down in less than an hour," Piccirilli said.

At issue is $2.5 million in delinquent charges for water and sewer service -- some dating to 1996 -- that the city authority says it's owed. The authority has already paid the Allegheny County Sanitary Authority for the brewing company's sewage treatment and is trying to recoup the cash.

Water authority officials said the company owes $2.3 million in sewer charges from previous years and another $200,000 in water and sewer charges from this year.

"This is very unfortunate, and we are very unhappy doing this, but they left us with no other choice," said Clifford Levine, solicitor for the city authority.

Levine said Pittsburgh Brewing failed to live up to the terms of a court-supervised agreement requiring it to keep its payments current.

Piccirilli said the city authority paid Alcosan too much money, and then charged his company too much in penalties and late fees. All told, the company said it's being overcharged by about $1.4 million.

By filing for protection under Chapter 11 of the federal bankruptcy law, Pittsburgh Brewing was able to stop the authority from shutting off its water. The law also gives it protection from other creditors, and lets the brewery stay in business while it tries to fix its money troubles, which amount to less than $10 million.

"We were reluctant to do this, but we decided this was the best way to get this under control," Robert O. Lampl, attorney for the company, said of the bankruptcy filing.

It's not the first time this year that Pittsburgh Brewing has sought help from Uncle Sam.

In April, the company asked the federal Pension Benefit Guaranty Corp. to assume about $5.6 million from an old pension plan that it said it can't afford to pay. The pension liability has kept Piccirilli from spending between $3 million and $5 million to upgrade decades-old equipment that was neglected by previous owners, he said.

"We can't fund the pension and fix a 144-year-old facility," Piccirilli said.

Filing for bankruptcy might set the stage for the company, with court approval, to turn over its pension plan to the federal pension agency, said Robert Sable, a partner at the McGuire Woods law firm Downtown, who represented the bankruptcy court trustee in a Pittsburgh Brewing bankruptcy case 10 years ago.

The company's suppliers would probably keep working with Pittsburgh Brewing despite the bankruptcy, and a group of private, unidentified investors will continue supporting them, Lampl said. Piccirilli said without the pension and sewer service debts, the company can turn a profit without reorganizing. Production of its core brands is up 2 percent this year, thanks in part to new aluminum bottles introduced in 2004.

Pittsburgh Brewing almost lost its water supply several times since 2003 because of overdue bills, but staved off collectors by making partial payments and asking the Allegheny County Common Pleas Court to hold off the city authority.

The last extension expired May 1, but the city authority did not shut down the water lines so Pittsburgh Brewing could work to settle the dispute with Alcosan.

But it's been more than a year since the sewer authority and beer company talked about the company's troubles, said Alcosan spokeswoman Nancy Barylak.

"We are still willing to sit down and meet with them, and we are still willing to discuss their concerns," Barylak said. After the last meeting, in July 2004, Pittsburgh Brewing officials were supposed to get an impartial assessment of how much water they used and how many pollutants were in it.

"The ball has been in Pittsburgh Brewing's court the entire time," Barylak said.

The bankruptcy filing took employees by surprise, said George Sharkey, business agent with Local 144B of the International Union of Electrical Workers/Communications Workers of America. His local represents about 90 bottlers at Pittsburgh Brewing. The company has about 150 unionized production workers overall.

"They told us it should be status quo for us," he said. "They said we should keep getting our paychecks, and that the only reason they did this was to prevent the shutoff of the water."

Shop steward Nick Costantino, 52, has worked on the brew house floor since 1982 and said Pittsburgh Brewing has given him the best job he's ever had. He's worried about whether management will be able to pull the company out of bankruptcy, but he supports Piccirilli and isn't about to tell him how to do it, he said.

"I don't make decisions," Costantino said. "I make beer."

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