Posted May 11, 2012 10:21 pm CDT
More than 100 current and former partners of Dewey & LeBoeuf who reportedly had pay guarantees of up to $5 or $6 million annually aren’t doing so well now that the law firm appears to be on the verge of dissolving.
Because partners are likely to be treated less favorably than other creditors in a likely law firm bankruptcy, they may get only 10 cents on the dollar or perhaps nothing at all, experts tell Bloomberg.
Banks that lent to the law firm, including JPMorgan Chase & Co. and Citigroup Inc., and Dewey’s bondholders might get 50 cents on the dollar, the article says. But since partner pay might be treated as a nonexistent law firm asset, those with guarantees could be out of luck.
“It could be argued by other creditors that partners’ pay is a return of equity,” explained bankruptcy attorney Chip Bowles of Bingham Greenebaum Doll. If so, they would get a lower priority than trade creditors.