Dewey & LeBoeuf’s UK administrators have struck a deal with the defunct firm’s US LLP to keep back roughly 30 per cent of London and Paris partners’ clawbacks for creditors of the UK LLP.
The news follows the approval of the firm’s liquidation plan by a New York court judge yesterday (28 February), nine months after the firm’s collapse last May.
Administrators at BDO will keep roughly $250,000 (£165,000) for UK creditors after agreeing to transfer an amount reported to be around $650,000 (£428,000) to the US LLP.
A total of $900,000 (£593,000) was raised by a group of former UK partners signing up for the firm’s partner contribution plan (PCP), which absolves participants of liability from the estate.
A report filed by UK administrators Mark Shaw and Shay Bannon last month confirmed that the BDO team was holding negotiations with the US LLP and its advisers to ensure that proceeds coming from UK partners’ settlement contributions would be made available to creditors of the UK LLP (9 January 2013).
The UK LLP covered the firm’s London and Paris bases.
Participating partners will now implement the settlement by paying an amount determined by their remuneration level while at the firm.
Documents filed in September 2012 show that settling partners included restructuring duo Mark Fennessy and Hazel Miller, both now at Proskauer Rose, and former Dewey London managing partner Peter Sharp, who now heads Morgan Lewis & Bockius’ City base (1 October 2012). Reports in the US indicate that the group consists of 15 partners.
The Chapter 11 liquidation plan won court approval from bankruptcy court judge Martin Glenn after a group of partners removed their objections to the proposals.
Albert Togut, managing partner of Togut Segal & Segal, Dewey’s bankruptcy counsel, told The Lawyer: “We are, of course, pleased that the court approved the PCP which represents the solution for a failed law firm’s problems – never, ever done before – and in only nine months, a record by many years over any other law firm case.
“What is most gratifying is that by the start of yesterday’s hearing, all of the objections had been resolved or withdrawn. Thus, it was an uncontested hearing which almost never happens in a complex Chapter 11 case. And this case was far more complex than most.”
Meanwhile, former executive director Stephen DiCarmine was due to testify in court yesterday but saw his subpoena withdrawn (21 February 2013). Two former partners objecting to the bankruptcy plan settled with Dewey and withdrew their objections and the subpoena.
The PCP itself was approved by the court last October (10 October 2012).
BDO declined to comment.