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Market Basket dispute stalls work on Waltham development

Construction at a large real estate development on the former Polaroid Corp. site in Waltham has ground to a halt, tied up in a family battle for control of the Market Basket supermarket company.

Market Basket is expected to be the anchor tenant in the 280,000-square-foot mixed-use development, which includes other stores and offices. Mayor Jeannette McCarthy of Waltham said Friday that work on the entire development has been halted as a result of the internal battle at Market Basket between factions of the Demoulas family.

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The board battle at the supermarket company has tied up payments of construction invoices and the processing of necessary paperwork, McCarthy said. The project had been scheduled to open in the first quarter of next year.

“The longer this goes on, the more difficult it will be to open on time,” she said, noting that the project has been ahead of schedule. “Hopefully, they will work out their internal issues.”

It is unclear how the Market Basket dispute could affect other real estate activities around the state. The company is believed to be in the process of developing supermarkets in Attleboro, Plymouth, Revere, and Athol.

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The Market Basket fight pits president Arthur T. Demoulas against other family members, led by Arthur S. Demoulas, who recently gained majority control of the company’s board.

Arthur T. has asserted that his opponents want control of Market Basket in part to approve greater cash distributions to the company’s nine shareholders. The board recently approved a $300 million distribution. Arthur S. has sought the removal of Arthur T. as president, alleging that he ignored the board’s authority and spent money recklessly. In court papers, Arthur T.’s opponents accused him of “self-dealing” transactions in which he has directed tens of millions of dollars to real estate businesses owned by his wife and brothers-in-law. Arthur T. says the transactions were vetted and approved by an outside arbiter.

The real estate project in Waltham is being developed by Retail Management and Development Inc. and 1265 Main LLC. A brother-in-law of Arthur T. is listed in state records as a principal of Retail Management and Development.

Scott Lang, a lawyer representing the development firm, said the Market Basket board recently stripped Arthur T. of the power to make day-to-day business decisions. Now the board is reviewing everything related to the company’s operations, which is holding up construction in Waltham, Lang said.

“As a result of this, things are backing up where no one has the authority to sign documents or permits, or pay invoices,” Lang said. “This is not something that came up at last minute — we’ve been working to get this done for six weeks, but the board hasn’t focused on it and gotten it done. Until this is resolved, everything has to come to a standstill.”

A public relations firm that represents the Arthur S. faction of the board did not return calls Friday. A firm representing the Arthur T. group declined to comment.

In Waltham, public officials say they are disappointed that internal Market Basket issues are delaying their yearslong work to construct the new development.

“This is a no-win situation,” McCarthy said. “The people of Waltham lose, there will be jobs lost — both in construction and when the store opens — and the company loses because they have a lot invested in this.”

Jaclyn Reiss can be reached at jaclyn.reiss@globe.com.
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