Big Dig contractor files for bankruptcy

June 24, 2008

On the heels of the announcement that Modern Continental Co. is being charged with lying about the quality of its work, the firm has filed for bankruptcy.

Modern Continental made a Chapter 11 filing in federal bankruptcy court in Boston June 23, the first business day after federal prosecutors charged the company with lying about its work on two areas of Boston’s Big Dig project, including the portion where a 2006 ceiling collapse killed a woman.

On the heels of the announcement that Modern Continental Co. is being charged with lying about the quality of its work, the firm has filed for bankruptcy.

Modern Continental made a Chapter 11 filing in federal bankruptcy court in Boston June 23, the first business day after federal prosecutors charged the company with lying about its work on two areas of Boston’s Big Dig project, including the portion where a 2006 ceiling collapse killed a woman.

The filing, which lists debts of $500 million to $1 billion owed to more than 200 creditors, claims the state of Massachusetts failed to pay the firm for its construction work. According to the Associated Press, the firm has been paid more than $3 for work on the project, and the state says it was overbilled.

A statement by the firm said it has been difficult for the company to collect on some of the more than $1 billion in construction work it has completed the past four years, much of it in its home state.

"As a result of Modern's struggle to collect due and owing contract balances from the Commonwealth, Modern's ability to timely fulfill its remaining contractual requirements as well as its obligations to its creditors has been placed in jeopardy," the company said.

A spokeswoman for the U.S. Attorney's office declined to immediately comment on the filing, but an expert in bankruptcy law said it would not impede the government's ability to pursue the criminal case against Modern Continental.

"The government has priority here," said Anthony Sabino, a professor at St. John's University's School of Law. "Private creditors could be hurt by the criminal case. But this bankruptcy is not going to stop the criminal case."

If convicted in the criminal case, the company faces up to $24.5 million in fines, as well as restitution payments.

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