With Bankruptcy Plan Imminent, Dewey Estate Continues Fight With Retired Partners
Dewey & LeBoeuf's bankruptcy advisers expect to file a Chapter 11 bankruptcy plan by Thanksgiving Day in which they will lay out how the estate's paltry funds will be divided among creditors, lawyers for the estate said in court Wednesday.
The plan will offer estimates of how much money the firm will have to pay out and how it should be split between secured lenders owed some $260 million and unsecured creditors owed between $300 million and $500 million more. Lead Dewey lawyer Albert Togut said Wednesday the estate expects to have a hearing Jan. 3 on Dewey's disclosure statement, which the court must approve before a reorganization plan can move forward. If all goes well, Togut said, a confirmation hearing on the plan should happen by the end of February.
News of the bankruptcy plan's imminent arrival came during a hearing Wednesday held to discuss the Dewey estate's attempt to disband a U.S. trustee-appointed committee formed at the start of the six-month-old Chapter 11 case to protect the interests of Dewey retirees. Dewey's advisers argue that the committee has served mainly to drain estate funds while making few if any meaningful contributions to the bankruptcy's proceedings.
"It's an understatement that the former partners committee has not been a positive force in the case," Togut said to U.S. Bankruptcy Judge Martin Glenn, who is overseeing the case.
The committee made up of two retirees apiece from legacy firms Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae has been among the most vocal critics of a $71.5 million settlement plan struck by the estate and former Dewey partners that frees participants from future claims brought by the estate in exchange for cash payments ranging from $5,000 to $3.37 million. The group unsuccessfully tried to persuade Glenn not to approve the settlement, which he did on Oct. 9. The former partners subsequently appealed Glenn's decision in Manhattan federal court, arguing that certain aspects of the deal require further scrutiny, including into whether it benefits Dewey insiders at the expense of others. An ad hoc committee of retirees, represented by Dorsey & Whitney, has raised similar objections and is also appealing Glenn's decision.
"We do think they filed the appeal as another tactical device to maintain the necessity of their existence," Edward Weisfelner, a partner at Brown Rudnick who represents the bankruptcy's official creditors committee and supports the estate in disbanding the former partner group, said during Wednesday's hearing. Typically, only one committee is appointed in a bankruptcy with the scope of Dewey's, several attorneys said in court Wednesday.
Glenn seemed skeptical of Togut's intentions, saying at one point during the hearing, "What you're trying to do is pull the rug out from under the committee who opposed the [partner contribution plan]." Glenn said that while he believes he was correct in approviong the settlement, he is not "infallible" and a judge assigned to the appeal may reach a different conclusion about the deal.
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