State of Dewey's Middle East finances revealed as local partners battle over unpaid dues

Peter Gray, who was a local partner in the office before joining Gibson Dunn & Crutcher in April, is understood to have hired Fenwick Elliott construction partner Julian Critchlow and Patrick Hennessey of 39 Essex Street amid attempts to claim over $180,000 in unpaid dues from the firm.

Dewey claims he is not due that amount, with tensions between Gray on one hand and fellow ex-Dewey partners Chris Sioufi and Gavin Watson on the other thought to be high.

Dewey has turned to Middle East firm Al Tamimi & Company, with the bankrupt US firm understood to have instructed Dubai-based senior associate Tarek Shrayh for representation in liquidation proceedings, with Gray representing himself before the court.

Litigator Gray, corporate and finance partner Sioufi and corporate and energy partner Watson have all launched claims totalling just over $2m (£1.3m), with the latter two both now at US rival Dechert.

It comes as local courts draw close to appointing a liquidator for the defunct US firm’s United Arab Emirates operations.

Gray applied for the appointment of a provisional liquidator in April and filed a claim for $182,750 (£117,373) in unpaid dues, understood to comprise bonus payments and other amounts because he is not considered to be due any additional compensation.

Roughly half of his claim is thought to come from his demand for compensation for his inability to serve his notice period because he was left without an office after Dewey sold off the lease on its premises to Dechert before he had left the firm.

He is also claiming a $25,000 bonus payment, while the remainder of the claim is for an end-of-service payment due to departing partners.

Sioufi and Watson, meanwhile, are not thought to have been paid their full 2011 and 2012 compensation and this month filed a claim for $1.85m (£1.19m) between them, representing $925,000 (£594,091) each, in an attempt to regain these dues.

However, the Dechert duo have agreed to subordinate their claims to other employees and creditors, meaning they will not be paid until parties such as service providers and the small number of staff have received their dues. This is despite the fact that the partners’ claims would normally be considered preferentially because, under Dubai International Financial Centre (DFIC) law, partners are treated as employees.

Sioufi said: “Gavin and I have agreed to subordinate our claim in order not to render the liquidation insolvent.”

Their claim came after the firm filed for bankruptcy in the US and administration in the UK at the end of May (29 May 2012).

The staff are owed a total of $342,766 (£220,145) in unpaid remuneration, according to a preliminary report by the provisional liquidator to the Dubai International Financial Centre court dated 31 May, with this amount including $182,750 (£117,569) claimed by Gray.

Other creditors are owed $82,035 (£52,776), including $20,041 (£12,893) to Qatar-based law firm Al-Ansari & Associates, $16,750 (£10,776) to India’s DSK Legal, $490 (£315) to Armani Hotel and $41 (£26) to flower provider Noora Flowers.

Shahab Haider of Sajjad Haider Chartered Accountants is set to be appointed liquidator next week after already being appointed provisional liquidator since April. He has been attempting to keep the firm solvent during the liquidation.

The preliminary report also reveals that Dewey’s United Arab Emirates operations were owed $451,421 (£290,415) in accounts receivable as of 31 May, although the origin of the work for which debtors owe Dewey is thought to be a particular source of tension.

The second largest debtor was Injazat Technology Fund, originally a client of Sioufi which Gray represented in a professional negligence claim against SNR Denton legacy firm Denton Wilde Sapte (27 October 2011). The client owed Dewey fees worth $134,358 (£86,437), according to the report.

The report states that London director of administration Karen Morrissey and former partners are assisting Haider in attempts to realise the receivables. The liquidator’s staff have met with Injazat, which, according to the report, disagrees with the amount owed.

A Gray client, referred to in the report under a code name due to the sensitivity of the matter, owed the US firm $174,463 (£112,238), with the report stating that a “broad agreement” has been reached with the client to transfer the monies into an escrow account under control of the liquidator and then to the LLP’s estate once Dewey has written the client a comfort letter.

Gray, Morrissey and Al Tamimi declined to comment.