Bankruptcy Judge Kevin Gross on Friday cleared private-equity giants Sun Capital and Cerberus, among others, to pay $166 million to settle allegations that their 2004 purchase of Mervyns from Target Corp. doomed the now-defunct retailer, the Wall Street Journal reported today. The settlement paves the way for Mervyns’ creditors to pocket some extra change about four years after the retailer’s liquidation saw the closure of its 175 stores and the loss of thousands of jobs. Mervyns sought chapter 11 protection in July 2008, four years after Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler purchased the California retailer from Target for $1.2 billion. The investor group structured the buyout as two separate purchases — one for the retail operations, and one for the chain's valuable real-estate holdings. The group had earned more than $250 million in profits on Mervyns.
