Recipients of Dewey's Final Payments Sued by Trustee
Dewey & LeBoeuf's liquidation trustee continued his efforts late last week to recover money that the defunct firm paid out in the 90 days before it filed for Chapter 11 bankruptcy protection, suing 18 vendors for the return of a collective $3.09 million.
The suits, filed Thursday and Friday, follow similar so-called preference actions launched against eight law firms and a handful of other businesses in early August seeking a total of $5.7 million.
The actions are a routine step in the bankruptcy to ensure that Dewey didn't give favorable treatment to certain vendors just before going under. Bankruptcy law dictates that any money collected is intended for redistribution to creditors, meaning those sued could eventually see a portion of whatever funds they turn over returned.
Dewey notes in its recent filings that unsecured creditors would have received between 4.8 percent and 13.4 percent of the value of their claims if Dewey liquidated under Chapter 7, but does not specify the estimated collections under Chapter 11.
One of the suits, which seeks $171,065 from 24-hour car service Dial Car, didn't sit well with the company's president and CEO, Michael Kordonsky.
"This is adding insult to injury," says Kordonsky, whose company has filed a claim for $220,049 that it says Dewey still owes. "I think I have a case, and I'm fighting it." Kordonsky said that Dial Car, which caters to the legal industry, had worked with Dewey predecessor firm LeBoeuf, Lamb, Greene & MacRae for 30 years, and continued to work with Dewey & LeBoeuf after it merged with another longtime Dial Car client, Dewey Ballantine. "They have not done right for us."
The latest round of suits also includes actions against legal recruiting firms Major, Lindsey & Africa (in which Dewey seeks $66,250) and Marina Sirras & Associates ($37,500); Four Seasons Hotels ($20,079); collection services company Commercial Collection Consultants ($20,000); insurance and risk management company Marsh USA ($549,429); and a variety of other suppliers and legal business support vendors.
The suit asking for the return of the most money is against legal staffing agency AdamsGrayson Corporation, which, according to the suit, received payments from Dewey totaling $1.5 million for services provided from October 20, 2011, to February 16, 2012.
The nearly identical, seven-page complaints argue that the transfers were made when Dewey was insolvent.
Like Dial Car, many of those sued have also filed claims saying Dewey still owes them money for unpaid bills; Dewey argues that those claims "should be disallowed" until the money being sought in the preference actions is repaid in full. In some cases, the bills paid during the 90 days before Dewey's bankruptcy stemmed from invoices that were more than six months old.
In a statement, Marsh USA pointed out that the suit is strictly a preference action and "does not express any concerns whatsoever regarding the work Marsh performed for Dewey." Sirras declined to comment, and representatives for the others did not immediately respond to requests for comment Monday.
New York law firm Hahn & Hessen filed the latest suits on behalf of Dewey liquidation trustee Alan Jacobs. Hahn & Hessen partner Edward Schnitzer had no comment. According to the suits, the Dewey estate first demanded repayment of the funds in question in May.