Thaw thought

Sale of Moscow and Almaty offices almost scotched due to freeze on Dewey’s assets

The transfer of Dewey & LeBoeuf’s Moscow and Almaty outfits to Morgan Lewis & Bockius has definitely been one of the neater rescue deals, with Morgan Lewis taking on entire teams in both cities.

But wranglings between creditors almost scuppered the whole thing and could have deprived Dewey of valuable cash, according to a source close to the deal.

Problems arose when the Pensions Benefit Guaranty Corporation (PBGC) became concerned about an alleged $80m (£51.79m) shortfall in three Dewey pension plans. Up to then a group of three creditor banks, understood to be Citi Private Bank, Bank of America and HSBC, were having
the greatest say about how Dewey’s crash was handled. PBGC was not happy about this, so sued Dewey on 15 May and moved to become a trustee of the schemes. A freeze was then put on Dewey’s assets, making deals almost impossible to do.

Strangely, this did not seem to affect the sale of the Warsaw office to Greenberg Traurig.

Nevertheless, according to the source, the Moscow deal, which had been in the pipeline, was put in jeopardy even though Morgan Lewis was offering cash for the offices. But this did not last long and was resolved after three of the banking creditors sold their debts on the secondary market.
“[The Moscow and Almaty offices] were effectively being held hostage by creditors, who were taking a big risk, because the [Moscow and Almaty] teams almost just walked out,” said the source.

“It was only when the creditors sold their stakes that the logjam lifted.”