Posted May 29, 2012 11:39 am CDT
Dewey & LeBoeuf filed for bankruptcy on Monday, marking a formal end to the law firm formed in a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae.
The Chapter 11 petition anticipates a managed wind-down of affairs, followed by liquidation, according to a press release. The petition says Dewey owes $225 million to secured lenders and $90 million to other creditors, according to the New York Times DealBook blog, the Wall Street Journal (sub. req.) and the Am Law Daily. The firm lists $255 million in accounts receivable and $13 million in cash.
The filing marks the largest law firm collapse in U.S. history, DealBook says. Two-thirds of Dewey’s partners have left the firm.
The filing blames Dewey’s collapse in large part on the economic downturn, but also acknowledges problems with pay guarantees to partners, the Am Law Daily says. Dewey has at least 100 guarantees, the filing says, though the full extent of the arrangements “is subject to continuing investigation.”
Among the creditors is Shook, Hardy & Bacon, which is owed more than $473,000. The firm defended Dewey in a malpractice suit that settled in February, the Am Law Daily says. Another creditor is a former associate owed $416,000 in a “severance arrangement.”
Dewey is asking the bankruptcy court in Manhattan for permission to continue to pay about 90 employees to assist with the wind-down.