Two private equity firms agreed to a $166 million settlement of a lawsuit that accused them of stripping assets from the Mervyn's retail chain and pushing the former unit of Target Corp into bankruptcy, Reuters reported yesterday. Creditors had sued Sun Capital Partners, Cerberus Partners and others in bankruptcy court for a series of transactions stemming from the $1.25 billion leveraged buyout of Mervyn's from Target in 2004. The creditors blame the funds along with others of stripping Mervyn's of valuable real estate, leaving the company insolvent and unable to repay creditors when it filed for chapter 11 on July 29, 2008. The chain was liquidated and went out of business during its bankruptcy.
