As we’ve previously mentioned, tomorrow, April 30, was supposed to be the deadline for Dewey to reach a new deal with its syndicate of bank lenders. The firm owes its banks a reported $75 million pursuant to a $100 million revolving line of credit.
So what’s the latest — and relatively upbeat — news about Dewey?
UPDATE (6:00 PM): More Dewey debt news — good news, happily — has been added below.
We’ve been hearing rumblings, albeit vague and unsubstantiated, that the firm might be getting additional time from its lenders to reach a new deal. “Word around the office is that the firm just secured an extension from banks,” said a source. “Anywhere from two weeks to a month, it’s unclear.”
This report appears to be corroborated by an article in yesterday’s New York Times. The piece, by Peter Lattman, focuses on the possible criminal investigation into Dewey, but it also contains this discussion:
Dewey is struggling under the weight of a heavy debt load. The firm is locked in negotiations with its banks to restructure its debt. In addition to a $100 million credit line with the banks, it also has a $125 million bond issue, some of which matures next year.
The banks — JPMorgan Chase, Citigroup, Bank of America and HSBC — have given the firm until Monday to come up with a reorganization plan. That deadline, already extended once, could be further delayed, according to people in the discussions.
One can understand why the banks might be willing to give Dewey a little more time. If the transition of Dewey from its current state to a future state (whatever that state might be) can be handled in an orderly manner, the lenders might get a better recovery on the money they’ve already sunk into Dewey.
In other positive Dewey news, on Friday the firm sent out a “Global Personnel” memorandum aimed at reassuring its employees. Here’s the key language:
We are writing to let everyone know that they should not be alarmed by recent press speculation about any imminent plan for any type of filing. The firm remains in business, continues to serve its clients with the highest level of quality and has made no decision to go in any different direction.
Perhaps the memo represents management’s response to complaints that firm leadership hasn’t been as forthcoming as possible about the rapidly changing situation at Dewey. If you have information or opinions you’d like to share about Dewey & LeBoeuf, please email us or text us (646-820-8477).
UPDATE (4:30 PM): And now, some bad news. First, the talks with Greenberg Traurig, which some hoped would rescue Dewey, have concluded. A spokesperson for Greenberg just sent Above the Law this statement: “Greenberg Traurig has discontinued its discussions with the Dewey & LeBoeuf firm.” You can read more about the GT talks concluding over at the Wall Street Journal (sub. req.).
According to the WSJ article, by Jennifer Smith and Ashby Jones, “Greenberg leaders are continuing informal efforts to cherry-pick certain Dewey attorneys and practice groups.” According to an ATL tipster, Greenberg’s recruiting efforts are focused on bankruptcy lawyers and litigators. “A few corporate attorneys might be in the mix,” said this source, “but most corporate attorneys are lining up positions elsewhere.”
UPDATE (6:00 PM): Dewey might get a much longer lease on life. Reports Reuters (via CNBC):
Dewey is close to securing a long-term extension on a Monday deadline on $75 million owed under a credit line to lenders led by JPMorgan Chase & Co, according to a person familiar with the matter. The extension, likely in the 90- to 120-day range, would stave off a default that could trigger a bankruptcy, said the person, who declined to be named because talks are private.
The banks have offered a term sheet for the extension, but the sides are still trying to hash out details, including the length of the extension and the nature of covenant terms proposed by the banks, the person said….
Lenders had initially offered a one-week extension, but that idea was shelved when parties decided it would not provide enough time for the firm to work out its underlying debt issues.
Let’s hope that this deal comes together. There’s a lot at stake — for the banks, for Dewey partners, and for the thousands of other lawyers and staffers who work at the firm.
(A copy of Friday’s “Global Personnel” memo appears in full on the next page, along with links to recent news articles about Dewey. Once again, please email us or text us (646-820-8477) with your info. Thanks.)