Top 25 Partners Got $70M in Dewey's Last Year; Unsecured Creditors May See 15 Cents Per Dollar
In the last 12 months before Dewey & LeBoeuf imploded in a record-breaking bankruptcy last year, the top 25 partners of the BigLaw firm were paid some $70 million in draws and distributions.
It isn’t known how much this same select group of partners received from the proceeds of a 2010 public bond offering that raised $150 million for Dewey, the Am Law Daily (sub. req.) reported in an article that calls Dewey’s downfall the big law firm story of 2012.
Meanwhile, as the bankruptcy moves forward, unsecured creditors likely may get between 5 and 15 cents on the dollar, the article predicts, citing the Dec. 31, 2012 “Amended Confirmation Plan Disclosure Statement” in the case.
Creditors claim they are owed around $600 million, as another Am Law Daily (sub. req.) article details.
And, at a Thursday hearing in federal bankruptcy court in Manhattan, an attorney with the U.S. trustee’s office expressed concern that creditors could get nothing because of administrative expenses that currently total about $54 million.
Meanwhile, as was discussed at the hearing, there are still questions that must be cleared up before a settlement can proceed in which, according to court filings, some 400 former partners agreed to return $71 million in 2011 and 2012 earnings, the article says. Among the settlement issues to be resolved are whether former partners are fully protected from liability in exchange for agreeing to ante up.
Judge Martin Glenn was visibly angry as he discussed a section of the disclosure document for the settlement concerning client files, the article notes. Files that are not claimed, Glenn reminded those at the hearing, must be destroyed, as he stated at a July hearing. However, the filing says Dewey hopes to avoid the seven-figure cost of shredding unclaimed files.
At the July 9 hearing, the judge pointed out, he had told Dewey to get an ethics opinion about its hope to avoid dealing with unclaimed files, but no such ethics opinion apparently exists.
“I will not approve a plan that transfers client files to a trust,” the judge said. “Your firm has ignored what I told them on July 9. And I’m not happy about it.”
The judge’s idea that lawyers should stick around after the hearing and hammer out a plan to deal with his to-do list and make needed revisions to the settlement and disclosure document was not enthusiastically received by partner Edward Weisfelner of Brown Rudnick, who is advising an unsecured creditors committee.
“Just so your honor knows, with my billing rate I can’t be involved in language disputes,” said Weisfelner. Court records show he charges $1,000 per billable hour, the Am Law Daily article says.
Additional coverage:
ABAJournal.com: “Top Partner Recalls Last Days at Dewey: Efforts to Revise Pay Failed with ‘Cascade of Departures’”
ABAJournal.com: “Dewey Retirees Seek Independent Trustee, Claim ‘Pre-Bankruptcy Insiders’ Control Firm’s Windup”
ABAJournal.com: “Dewey Advisers Ask Court to Approve Partner Settlement in Flurry of Filings”
ABAJournal.com: “Former Dewey Partner Alleges He and Others Were ‘Fraudulently Induced’ to Get Citibank Loans”
