Modern Continental files for bankruptcy protection

June 23, 2008 11:56 AM Email| Comments (0)| Text size – +

By Jonathan Saltzman and Sean Murphy, Globe Staff

Modern Continental Co. filed for Chapter 11 bankruptcy protection today, the first business day after federal prosecutors brought 49 charges against the Big Dig's largest contractor, including allegations that it knew about bolts coming loose in the ceiling of the Interstate 90 tunnel years before a 2006 collapse killed a motorist.

Modern Continental said in a petition to the US Bankruptcy Court in Boston that it had debts of $500 million to $1 billion and assets of only $100 million to $500 million. The company estimated that it had 200 to 999 creditors, including one it owed nearly $9.9 million.

The board of directors of Modern Continental voted June 11 to seek protection from its creditors, according to court documents.

The company was expected to issue a statement today, according to Harold B. Murphy, who helped prepare the bankruptcy petition.

Late Friday, the US Attorney's Office in Boston brought a slew of federal highway fraud and wire fraud charges against Modern Continental. Prosecutors alleged that the company made false statements on construction documents certifying the quality of its work and systematically cheated on the bills for labor and materials it submitted.

US Attorney Michael J. Sullivan said his office brought the charges after plea negotiations with the company broke down. Modern Continental denied the allegations in a lengthy statement, calling them ``completely unfounded and without merit.''

Modern Continental teetered on the brink of bankruptcy in 2004, but to avoid a default and the resulting chaos it would inflict on the Big Dig project, the state helped arrange for another large Big Dig contractor, Jay Cashman Inc., to supervise the company's remaining contracts.

The deal had the strong backing of Modern Continental's insurance carriers, which had guaranteed the completion of the company's work on the project. However, the deal also meant that Modern Continental was essentially a shell corporation, with no real independence