Judge OKs Suit by More Dewey Creditors, But Insurance Might Not Pay
Although U.S. Bankruptcy Judge Martin Glenn approved a suit for millions by unsecured creditors against former leaders of the now-defunct Dewey & LeBoeuf, it’s unclear whether the firm’s $50 million management policy will cover them.
Glenn didn’t address the substance of the claims of the official committee of unsecured creditors appointed in the bankruptcy in his ruling. Those claims include over-distributing the firm’s available cash to select partners and concealing the firm’s true financial condition from its partners, employees and creditors, the American Lawyer reports. Glenn also refused to comment on the disagreement with XL Specialty Insurance Company, the lead insurer connected to the policy, and did not address the viability of the claims absent insurance coverage.
Hughes Hubbard & Reed partner Ned Bassen, who represents two former Dewey leaders, said he hopes to resolve the issue with XL Specialty soon by working on solutions with the unsecured creditors committee, according to the American Lawyer.
In a separate ruling, Glenn denied a request by the unsecured creditors to disband a committee of retired Dewey partners given an official role in the bankruptcy. The group is one of the only vocal opponents to the expected $71.5 million partner settlement plan and other elements of Dewey’s bankruptcy, the American Lawyer reports.
Dewey’s advisers filed a Chapter 11 plan last week.
Prior Coverage:
ABA Journal: Creditors Pursue Ex-Dewey Managers, Claim Generous Pay Contracts Were Recklessly Inked
ABA Journal: Retired Dewey Partners Say Judge’s Fast-Track Clawback OK ‘Adds Insult to Injury,’ May Appeal
