Dewey Plan To Give Retired Partners a Seat at the Bankruptcy Table?
What's the latest news in the Dewey & LeBoeuf bankruptcy?
As we mentioned earlier today, retired partners of Dewey & LeBoeuf received some potentially good news. These former partners, whose unfunded pensions were supposed to be funded out of firm profits, will have a voice in the firm’s bankruptcy proceedings. As reported by the WSJ Law Blog and Am Law Daily, the U.S. trustee’s office has appointed an official committee of former partners (in addition to the standard official committee of unsecured creditors). The four ex-partners on the committee are David Bicks, Cameron MacRae, John Kinzey, and John Campo.
What prompted the move? As legal consultant Edwin Reeser, whose analysis of the Dewey situation recently appeared in these pages, told the WSJ, “The retired partners have uniquely separate interests which warrant consideration as a special class of creditors.”
It’s nice that they have a seat at the table, but will the ex-partners end up with any money at the end of the process? That’s less clear. As Jerome Kowalski, another law firm consultant, told the Journal, “There has never been a law firm bankruptcy that resulted in any payment being made to the equity partners… They’ll have zero sway other than perhaps some moral imperatives, and moral imperatives don’t have much play in bankruptcy courts.”
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The unsecured creditors might have more luck than the former partners. Who’s on the unsecured creditors’ committee?
Here’s a report from Am Law Daily:
[The] official unsecured creditors’ committee is composed of three vendors that provided a mix of services to Dewey & LeBoeuf: staffing agency HireCounsel, car service Inta Boro Acres Inc., and equipment lessor Winthrop Capital….
According to court filings, HireCounsel is owed $1.6 million and is Dewey’s fifth largest unsecured creditor. The company’s contact is listed as Lynn Mestel, a New York legal recruiter who helped put together the merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae in 2007.
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As we’ve mentioned before, legal recruiting can be lucrative, with some headhunters scoring seven-figure fees. Former Dewey partner Stuart Saft has blamed recruiters for contributing to Dewey’s demise, alleging that recruiters tried to spread tales of trouble so they could profit from placing Dewey lawyers at other firms. Hopefully some recruiters did earn fees from Dewey placements, considering that some of them — such as HireCounsel — will end up getting stiffed on fees owed to them by Dewey.
Inta Boro executives were on hand at the Wednesday meeting held to help form the unsecured creditors’ committee. Inta Boro vice president Kubilay Durantas told The Am Law Daily at the time that Dewey owes his company more than $200,000 — an amount that keeps them off the list of the firm’s 20 largest unsecured creditors, which cuts off at $362,000.
Inta Boro provided car service to Dewey. As you may recall, one of the first signs that Dewey was in deep dew-dew was when it got cut off by a car service — maybe Inta Boro, maybe not — for non-payment of bills.
Minnetonka, Minnesota–based Winthrop is listed in court filings as a secured creditor owed $35.5 million. The company was represented at Wednesday’s meeting by Kelley Drye & Warren partner Robert LeHane, who could not be reached late Thursday.
That’s a staggering sum, $36 million. One wonders how that kind of debt accrued. Why didn’t Winthrop cut off Dewey at an earlier point in time?
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In other Dewey developments, former D&L lawyers continue to find new homes. For example, Paul Hastings just hired prominent antitrust lawyer MJ Moltenbrey. Before joining Dewey, Moltenbrey served as director of civil non-merger enforcement in the Antitrust Division of the Justice Department. On the overseas front, Ingrid Zhu-Clark, former head of Dewey’s China practice, is heading over to the Beijing office of Morgan Lewis & Bockius, per Legal Week.
That’s it in terms of Dewey news updates. If you’re interested in some news analysis — continued discussion of what went wrong at Dewey, picking up where yesterday’s story left off — flip to the next page.
