03:51 PM EDT on Friday, September 23, 2005

projo.com staff

PROVIDENCE -- The co-owners of The Station nightclub, beseiged by claims in the wake of the disastrous fire at the club that killed 100 people, filed for personal bankruptcy protection today.

Brothers Jeffrey and Michael Derderian filed separate, but identical, papers under Chapter 7 of federal bankruptcy laws, in U.S. Bankruptcy Court here.

"A recent review of our present financial condition has resulted in our actions today," the Derderians said in a statement sent to the press. "Regrettably, we are no longer able to satisfy all of our present creditors or our potential future creditors."

Both estimated in the bankruptcy petitions that they have assets at the bottom end of the scale -- ranging from zero dollars to $50,000; a maximum amount of estimated debts -- more than $100 million -- and creditors estimated at between 200 and 999.

The fire at the West Warwick club occurred on Feb. 20, 2003. Since then, the Derderians have each been charged with 200 counts of manslaughter, ordered to pay more than $200,000 in workers' compensation claims resulting from the death of four employees in the fire, and face a slew of civil suits filed by victims and their families.

"Earlier this year, we began making payments to the families of the four employees, our friends, who were lost in this tragedy. We intend to continue those payments. In addition, it is our understanding that any insurance coverage we did have in effect at the time of the fire is not affected by this filing," the Derderians continued in their statement.

The Station burned to the ground during a concert by the 1980s rock band Great White. The fire was sparked by a pyrotechnics display that ignited flammable foam lining the club's walls and ceiling. The band's former tour manager, Dan Biechele, who lit the pyrotechnics, is also charged with involuntary manslaughter. More than 200 people were also injured in the blaze, which became one of the worst nightclub fires in the country's history.

"While we realize no amount of money could ever erase the injuries suffered or the heartache of loss," the Derderians said in their statement today, "we hope that in some small way our insurance and our continued payments will benefit those affected."

The bankruptcy petition was entered a week before the Derderians are due to go on trial in state Workers' Compensation Court on charges they have failed to pay out the workers' comp benefits to the families of the employees who died.

The lawyer representing the Derderians in the bankruptcy, Christopher M. Lefebvre of Pawtucket, said he believes the bankruptcy filing will stop the proceedings in Workers' Compensation Court.

Other lawyers for the brothers have previously contended that they do not have the financial resources to pay the claims. So far, the lawyers have provided no documentation of the Derderians' finances, saying that to do so would violate their clients' Fifth Amendment right against self-incrimination.

The personal bankruptcy petition, however, means the Derderians will have to disclose their financial situations, including details on their assets and whom they owe.

Today's filings included a partial list of debtors, which refer to banking and credit card companies, with no details on how much is owed, along with a request for more time to file a complete list, until Oct. 21. That request notes that more than 400 parties are "entitled" to be notified of the bankruptcy filing. They are not described.

The Derderians' bankruptcy filing is "not a surprising event, but certainly it was an unintended consequence resulting from this very sad tragedy," Lefebvre said.

Their filing also comes as a new federal bankruptcy law is poised to take effect on Oct. 17.

The new law is widely expected to make it harder for debtors to seek protection from creditors under Chapter 7 of the bankruptcy code. Instead, industry experts say, more debtors will be forced to file under Chapter 13, which requires a repayment plan.

Lefebvre, a bankruptcy lawyer, was quoted in a Journal story today as saying that his "caseload has exploded" as the new law nears.

-- With reports from Journal staff writer Edward Fitzpatrick