Update, 9/21/2012, 8:25 a.m. EDT: The third and fourth paragraphs of this story have been revised to incorporate information about a late Thursday court filing submitted by Dewey & LeBoeuf’s bankruptcy advisers that includes a detailed breakdown of which former firm partners have agreed to contribute to a proposed settlement with the estate and how much each has offered to pay.
The future course that failed law firm Dewey & LeBoeuf’s bankruptcy proceedings will follow could be decided as early as Friday, when the judge overseeing the Chapter 11 case is scheduled to continue hearing arguments as to why he should either approve a proposed $72 million settlement with former partners or reject it and install a neutral examiner to manage the matter.
At a three-hour hearing Thursday held before a standing-room-only crowd, two groups of retired Dewey partners that aim to upend the settlement argued that in its haste to finalize the plan, the Dewey estate failed to pursue the maximum amount of money that could be recovered from former partners and focused its attention too narrowly in determining who to blame for the firm’s downfall.
In its current iteration, the proposed settlementwhich would claw back compensation given to partners in 2011 and 2012, as well as tax advances and other paymentsprovides a waiver of Dewey-related liability to those who have agreed to participate, meaning the firm cannot sue them in the future and that they cannot bring claims against the estate over Dewey-related grievances. Longtime Dewey chairman Steven Davis was not allowed to participate in the settlement, and Dewey’s advisers have said the estate is considering bringing claims against him and two top firm managers who reported to him: former executive director Stephen DiCarmine and former chief financial officer Joel Sanders.
