Bankuptcy trustee seeks $22M from 9 former Dewey partners in compensation clawback suits
Posted May 15, 2014 07:50 pm CDT
Saying that Dewey & LeBoeuf was insolvent more than three years prior to its record-breaking bankruptcy in May of 2012, a trustee is seeking to claw back $22 million in compensation paid to nine former international partners of the now-shuttered megafirm.
Lawsuits filed Tuesday in federal bankruptcy court in Manhattan seek $13.9 million from the former chief of the firm’s Saudi Arabia office, who earned between $2 million and $6 million annually from 2009 to 2011, and low seven-figure sums from other lawyers based in China, Germany, Russia and South Africa, reports the Wall Street Journal Law Blog (sub.req.).
After Dewey & LeBoeuf was created in 2007 by the merger of Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, its income went into freefall along with the global economy, according to the suits. They say Dewey’s revenue plummeted “by a staggering $146 million” between 2008 and 2009, then fell $49 million more the next year. Although revenue went up between 2010 and 2011, at that point “it was simply too late” for the firm to recover.
None of the former partners named in the new litigation were among the 475 who agreed in 2012 to pay the Dewey bankruptcy estate over $70 million in exchange for protection from future liability.
The firm had some $245 million in debts when it filed for Chapter 11 protection in 2012.
ABAJournal.com: “Guilty pleas of 6 more ex-Dewey & LeBoeuf workers are unsealed by Manhattan judge”
Wall Street Journal Law Blog (sub. req.): “Witness for the Prosecution: Ex-Dewey Partner John Altorelli”