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Big Dig Contractor Files for Chapter 11

June 26, 2008


BOSTON --- The biggest construction contractor on Boston's Big Dig project filed for bankruptcy protection on Monday, June 21, the Wall Street Journal reported. Just last week, federal prosecutors charged the company with lying about its work on the notorious public works project.

On Friday, June 20, federal prosecutors charged Modern Continental with lying about the quality of its work on two areas of the tunnel system. One of those areas included a section where a ceiling collapse killed a woman. Prosecutors have accused the company of knowingly applying the wrong epoxy to hold up concrete anchors that failed in the 2006 ceiling collapse in the Interstate 90 Connector Tunnel, the Wall Street Journal reported.

The ceiling collapse killed 38-year-old Milena Del Valle, when tons of falling concrete crushed the car she was riding in. Her husband was driving the car at the time.

Modern Continental is also accused of knowing about shoddy workmanship on slurry walls in the I-93 Tip O'Neill Tunnel before portions of the walls blew out in 2004. When that occurred, water poured into the tunnel and created a traffic disaster.

Federal prosecutors also maintain that Modern Continental systematically overbilled the Big Dig project in a scheme that cost hundreds of thousands of dollars.

Modern Continental has argued that its overbilling resulted from bookkeeping errors that were ultimately fixed, and that earlier the company had actually underbilled the project. The company has also said it had no reason to believe that the slurry and epoxy it used on the project were unsuitable, the Los Angeles Times reported.

In a statement, Modern Continental called the charges "completely unfounded and without merit."

Modern Continental Co. made the Chapter 11 filing in federal bankruptcy court in Boston. The bankruptcy petition lists debts of $500 million to $1 billion owed to more than 200 creditors. Assets are listed at $100 million to $500 million.

The court filing indicates Modern Continental's board voted June 11 to seek bankruptcy protection from creditors. According to the bankruptcy petition, the largest creditor is URS Corp., a Boston-based firm owed nearly $9.9 million.

In the federal case, the company faces up to $24.5 million in fines, as well as restitution payments, the Wall Street Journal reported.


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