Merrill Lynch & Co., Morgan Stanley, Deutsche Bank AG and a law firm will pay $180 million to Boston Chicken Inc. creditors to settle claims related to the restaurant chain’s collapse.
Boston Chicken, which was based in Golden, went public in 1993 and filed for bankruptcy five years later. Bankruptcy trustee Gerald K. Smith sued the three banks and New York-based Paul, Weiss, Rifkind, Wharton & Garrison, alleging they helped hide losses and keep the company afloat.
The settlement “is a fair and reasonable compromise” that avoids “complex, protracted and time-consuming litigation,” according to a motion filed by attorneys for Smith and the defendants Jan. 13 in federal court in Phoenix.
The terms are confidential, Paul Weiss said in a statement.
Available court documents don’t specify how much each of the four defendants will pay.
They denied any liability and admitted no wrongdoing under the settlement, reported Wednesday by Dow Jones Newswires.
Boston Chicken, which ran the Boston Market restaurants, filed for Chapter 11 protection in October 1998 and was acquired by McDonald’s Corp. in 1999 for $173.5 million.
Former top management of Boston Chicken left before the 1998 bankruptcy and before McDonald’s purchase of the Boston Market piece of the business, said Kelly Heisler, a spokeswoman for Boston Market Corp., which is based in Golden.
“At Boston Market Corp., we don’t currently have any affiliation with Boston Chicken, and we don’t have any interaction with former management,” Heisler said.
Merrill Lynch, defunct accounting firm Arthur Andersen LLP and other companies settled shareholder suits over Boston Chicken for $20 million in 2001.
“Paul Weiss represented Boston Chicken consistent with the highest standards of the legal profession,” the firm said in the statement. The firm said it chose to settle “to forgo the time, attention, resources and risk inherent in litigating.”
Ted Meyer, a U.S. spokesman for Frankfurt- based Deutsche Bank, wouldn’t comment beyond saying the matter was resolved.
Mark Herr, a spokesman for New York-based Merrill Lynch, and Mark Lake, a spokesman for New York-based Morgan Stanley, had no comment.
The trustee’s attorney didn’t immediately return calls seeking comment.
Boston Chicken’s former chairman, Saad Nad hir, agreed Jan. 10 to pay $30 million to the bankruptcy estate, and Andersen settled with the trustee in December for $40 million.
