Al Togut doesn't look like a bankruptcy lawyer. At least he doesn't think so.
"I’m too tall," the 6-foot-5 Togut says, sleeves rolled up and tie loosened as he holds forth in the slightly messy Manhattan office where he has worked for more than 25 years. His walls and desk are littered with reminders of some of the more interesting places his career has taken him: a photo of a grinning Togut surrounded by the Rockettes; a silver bullet from a company that owned the rights to The Lone Ranger; a caricature of actor Zero Mostel plucked from the wall of legendary Broadway-haunt Sardi's. "Seriously, you go to bankruptcy functions and everyone is 5-foot-9."
In the 35 years he has been practicing law, Togut's imposing physical stature isn't the only thing that's made him stand out in New York's bankruptcy bar. His willingness to pick up assignments that the lawyers he considers his peers eschew has helped his boutique, Togut, Segal & Segal, forge lucrative and mutually beneficial relationships with the much larger Am Law 100 firms that often snag the most significant restructuring assignments.
And though the 63-year-old Togut—the eldest child of a kitchen supply salesman and a housewife from upstate New York—says he is humbled by how far he has come, he speaks with a self-confidence that falls just shy of boastful. "Nobody doesn’t know who I am," he says, ticking off a list of major cases in which he has played a role, mostly through referrals from counterparts at bigger firms: Enron, Chrysler, General Motors, American Airlines. “I can give you billion-dollar case after billion-dollar case.”
One of Togut’s most recent assignments, the Dewey & LeBoeuf bankruptcy, doesn’t come close to making his billion-dollar list, but it has nonetheless earned Togut more attention than any other this year and is likely to establish precedent in the field of law firm bankruptcies.
If all goes according to schedule, the Dewey estate could see its Chapter 11 plan confirmed by the end of February, just nine months after the firm became the largest ever to fail when it sought bankruptcy protection May 28. Once that happens, Togut and chief restructuring officer Joff Mitchell of Zolfo Cooper will conclude their work for Dewey and a pair of trustees tasked with collecting receivables and maximizing the estate’s remaining profits will take over.
The case has moved swiftly, in part because of a novel idea Togut came up with that has become a crucial element of the Chapter 11 plan: a settlement with 450 former Dewey partners that is expected to bring in $71.5 million—a small but important fraction of Dewey’s more than $600 million in debts—and free those who have signed on from future Dewey-related litigation. (The plan must still overcome an appeal filed by a group of retirees, and partners could still face claims from the firm’s former New York landlord.)
Dewey’s bankruptcy has given Togut the chance to correct what he views as mistakes in past law firm failures, but it doesn’t qualify for what he deems a “great case."
"There’s not been a great law firm case, including this one," he says in the emphatic, explanatory tone he has honed over years of making arguments in court. "This has been hard. Emotionally difficult. Taxing. Exhausting." How so? “I like to save businesses," he says. “As a lawyer, this is very sad for me."
Finley Crumbles: "A Disaster of a Case"
Togut says he was leery when fellow bankruptcy lawyer Martin Bienenstock, a longtime acquaintance then serving on Dewey’s five-person office of the chairman, called asking for help in April.
“I had sworn I would never touch a law firm," Togut says—with good reason. Nearly 25 years ago, he took a case he credits with helping him establish his reputation: the Chapter 11 bankruptcy of Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, which rose quickly and flamed out just as fast in a spectacular 1987 collapse that earned the American Lawyer cover line “The firm everyone loves to hate is falling apart.” (Several months earlier, the magazine had dubbed Dewey predecessor Dewey, Ballantine, Bushby, Palmer & Wood “a Finley, Kumble in sheep’s clothing” as a result of a recent growth spurt).
“It was a completely dysfunctional firm," Togut says of Finley Kumble, explaining it as a Ponzi-like enterprise that grew by borrowing against the receivables it collected from firms with which it merged. (Togut declined to comment on claims made in lawsuits filed by two former Dewey partners that it, too, operated as a Ponzi scheme, albeit for different reasons). After Finley Kumble’s bank lenders—whose $85.5 million in unpaid loans were unsecured—forced the firm into bankruptcy, “the partners headed for the hills," says Togut, who was initially hired, over the banks’ protests, to represent unsecured creditors. “The partners were not only gone, they didn’t want to talk to each other." He adds: "It was just a disaster of a case."
