Dewey Have Some Pretty Expensive Bankruptcy Advisers? How Much Do They Charge?

It seems that a fight may be brewing between secured and unsecured creditors (which, of course, is what happens in bankruptcy). Here’s a report from Thomson Reuters News & Insight:

Dewey’s unsecured creditors’ committee says it will investigate the actions of JPMorgan Chase & Co and other lenders and bondholders ahead of Dewey’s collapse last month. They say the group may have violated bankruptcy laws by demanding an increase in collateral as a condition for extending two approaching loan deadlines in the weeks before the firm filed for Chapter 11.

The added collateral may be voidable under bankruptcy laws barring creditors from receiving payment and other consideration from insolvent companies without giving something of equal value in return, Ed Weisfelner, lead lawyer for Dewey’s unsecured creditors’ committee, said at a court hearing last week.

While the loan extensions could be seen as equal value, the committee could argue they do not justify the added collateral because they did not benefit the firm or its other creditors.

This kind of intra-creditor squabbling may ultimately just end up diminishing the bankruptcy estate. But, at the same time, it’s hard to fault the different creditor groups for trying to get what they believe they are due.

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By Mary Elizabeth Hammond

The bankruptcy case isn’t the only Dewey-related litigation sloshing through the courts. Last week we wrote about the lawsuit filed by former D&L partner Henry Bunsow against several ex-leaders of the firm. One of them, former litigation head Jeffrey Kessler (who’s now at Winston & Strawn), commented as follows to Thomson Reuters:

[Kessler] said in an email that the allegations in the lawsuit about himself were “outrageous, untrue and without the slightest bit of merit.”

“It is sad that Mr. Bunsow, who received more of his compensation for 2011 than I did, would lash out with such false allegations against me,” Kessler said in the email.

Most of the allegations in the lawsuit were directed at others, Kessler said, and were about alleged events which he had no knowledge of or involvement in.

That’s a fair point. It seems clear now that partners at Dewey, including some fairly senior partners, were not involved in firm management. That was left largely to the Steves — which may have been part of the problem.

Finally, in the latest indignity to be visited upon a dissolving law firm, Dewey dropped out of the closely watched, just-released Vault 100 rankings. Who’s #37 this year?