HAMPTON -- The trustee overseeing Foss Manufacturing is asking a bankruptcy court judge to release the company from its five-year contract with Jenifer Smyth, daughter of former CEO Stephen Foss.

Patrick O'Malley, who was appointed to oversee the company during its Chapter 11 proceedings and seek out potential buyers for the company, is requesting the judge reject her employment contract.

A hearing has been set on the matter for Feb. 28.

According to court documents, O'Malley stated Smyth was scheduled to make $104,000 per year with guaranteed salary increases of 3 percent per year.

She was also entitled to participate in an incentive plan in which she could earn up to 30 percent of her salary, and receive 60 percent reimbursement for her health club membership.

"In light of the fact that the debtor's bankruptcy estate does not require her services, rejection of the employment agreement is appropriate," O'Malley stated in court documents.

Smyth signed a contract to serve as the company's director of marketing in August 2005.

The company filed Chapter 11 in September after its chief lender, CapitalSource Finance, cut off credit, alleging the company fraudulently borrowed millions of dollars to benefit itself and company insiders.

At the time, the board of directors, including Smyth, asked for and received the resignation of Stephen Foss.

The board of directors requested a trustee to run the company because of friction between the board and CapitalSource.

The trustee notified Smyth in October that her services were no longer needed, arguing it was their right to release the bankruptcy estate from "burdensome contracts."

This is the first contract that the trustee has asked to be voided.

Meanwhile, the company's creditors were recently given permission by bankruptcy Judge Michael Deasy to investigate not only Foss, but his wife, daughter and other former and current officers of the company who may have been a part of any fraud.

The committee stated in court documents it already conducted a preliminary investigation during which it found evidence that suggests Stephen Foss was using money from the company like a "personal piggy bank," and as a result, a full investigation should take place.

Stephen Foss resigned in August after allegations of fraud within the company came to light. Chief Financial Officer Kevin Sexton resigned last April.