Deadline for Dewey bankruptcy settlement delayed again

Former Dewey & LeBoeuf partners have been given an extra week to sign up to a settlement absolving them of liability from the firm’s estate, with bankruptcy chiefs currently battling to iron out concerns that have caused the plans to raise up to $90.4m (£57.9m) to stall.

The deadline for opting in to the deal, which protects partners from lawsuits from the estate and other partners, has been put back to next Monday (13 August) after originally being set for today (7 July).

This is the latest delay to the cut-off date, with partners originally asked to make a decision over whether to contribute the required amount by 24 July. The deadline was pushed back two weeks after opposition to the details of the deal was raised (20 July 2012).

Ex-partners are still waiting for the agreement documents, which they were due to receive on Saturday (4 August). A redraft was set to be circulated today, but this has not yet hit partners’ inboxes, fuelling expectations that the deadline will be delayed further still.

The most significant bone of contention is the estate’s ability under the settlement to sue ex-partners under the unfinished business doctrine, which allows a bankruptcy trustee to claw back profits made from work carried out at a new firm if the business was generated at the bankrupt firm.

A former partner said the deal documents ought to go out by tomorrow to give partners enough time to return them by the Monday deadline. However, the latest e-mail to ex-partners indicated that bankruptcy chiefs were still negotiating the details of the agreement.

It is understood that some creditors are also raising objections to the deal because they perceive that it currently allows certain former Dewey partners to get off lightly.

The settlement was amended late last month, with partners who were on the executive committee asked to put more money into the pot (27 July 2012).

It is thought that UK and Italian partners are unlikely to take part in the deal.

Dewey bankruptcy counsel Albert Togut, managing partner of Togut Segal & Segal, was unavailable for comment. Chief restructuring officer Joff Mitchell of Zolfo Cooper declined to comment.