HAMPTON -- A federal bankruptcy judge rejected a request to put Stephen Foss, former CEO of Foss Manufacturing, on a monthly budget, but did order a $3.5 million attachment to his assets.

Judge Michael Deasy said it is likely creditors can prove their case against Foss, which claims he looted the company for personal gain even though it was near bankruptcy.

Deasy issued the order last week on the heels of a July 7 hearing where creditors requested a freeze on the assets of Foss and his wife, Patricia. Creditors filed a civil suit last month against the couple and other former company officials. Creditors asked for the hearing because they said they were afraid that if the couple continues to liquidate and transfer assets to undisclosed locations it may cause "irreparable harm" to their legal efforts.

The suit seeks to recover from Foss, his family and other former company officials, some of the $15 million they claim was used for personal use, even when those officials knew the company was near bankruptcy. While a bankruptcy trustee sold the Hampton-based company for $39 million, the money was only used to pay off secured creditors, leaving unsecured creditors unpaid.

Deasy denied the creditors' request to put a $10 million attachment against the couple and also removed the general asset freeze against Patricia Foss. The judge agreed with her lawyer's arguments that creditors failed to prove she directly benefited from what her husband did and that she was only responsible for the events when she became a member of the company's board of directors in 2005.

Stephen Foss, who did not testify at the hearing, did not contest an asset freeze, but through his attorney said he wants to be able to spend those assets on living, business and legal expenses. Foss also denied creditors' accusations that he was trying to conceal his assets and was opposed to the suggestion that the couple be put on a monthly budget.

Deasy stated he put the attachment on the Fosses because creditors are likely to prove that even as the company was nearing bankruptcy, Stephen Foss approved $3.8 million of illegal expenses.

Those expenses include excessive salary, personal loans and home improvements to his residence in Rye and the home of his daughter, Jenifer Foss Smyth, in Massachusetts.

The attachment was placed on the couple's home they own in Rye, which was recently listed on the market with an asking price of $3.35 million.