Unsecured Dewey UK creditors to miss out on £5.2m in payments
30 July 2012 | By Joshua Freedman
7 April 2014
17 July 2014
7 March 2014
21 October 2013
4 November 2013
Dewey & LeBoeuf’s London and Paris operations had unsecured creditors who were owed a total of £5.2m, with almost none of this amount set to be paid, according to a report by the defunct US firm’s UK administrator.
The statement of administrator’s proposals for Dewey & LeBoeuf LLP and Dewey & LeBoeuf Services Limited says that the UK LLP has unsecured creditor claims worth approximately £4.2m, while the Services entity, which employed the firm’s staff, has similar claims worth £1m.
However, the proposals state that there are insufficient assets available to repay unsecured creditors, with the only funds available being a floating charge of up to £600,000 for distribution.
The firm is set to go into a creditors’ voluntary liquidation, with current administrators Shay Bannon and Mark Shaw of BDO (29 May 2012) expected to be appointed joint liquidators. This will be deemed to have been accepted on 6 August, with no creditors’ meeting called.
Even secured creditors are likely to suffer a shortfall, with the total debts secured by floating charges coming to approximately $225m (£143.5m), which was the UK LLP’s guarantee for the US LLP’s revolving credit facility and the $125m bond it issued in 2010.
Meanwhile, equity partners’ capital in the firm totalled £20.2m for the year ending 31 December 2011, an increase on £137,738 on 31 December 2010, the filings show.
The list of creditors shows approximately £1.1m owed by the UK LLP and £1.5m by the Services company, although some of this had been repaid.
Among the largest creditors of the UK LLP is Abousleiman & Partners, a Lebanese firm whose managing partner Randa Abousleiman, the daughter of founder Chaker Abousleiman, is the sister of ex-Dewey (now Dechert) London capital markets partner Camille Abousleiman. The firm – to which Camille Abousleiman referred much of his Lebanese work –is owed £187,570.
Former Dewey Paris partner Christophe Salamon is owed £177,526.57, while headhunters Eaton Search and Melton Legal Search are owed £112,800 and £69,600, respectively.
Other creditors include travel management company Reed & Mackay (£42,582.90) and vending machine provider Strong Vend (£65,408.16).
The Services company, meanwhile, owes £54,261.24 to property agency CB Richard Ellis, £42,207.49 to insurer Munich RE UK Services, £30,000 to corporate information provider Perfect Information and £373,600 to publisher Practical Law Company.
The largest creditor is City landlord Prudential Property Investment Managers, which is owed £562,414.94. The report states that the landlord has not accepted the surrender of the lease and wishes to re-let the premises.
A number of barristers are also listed as creditors, including David Mumford of Maitland Chambers (owed £11,844), David Murray of Fountain Court Chambers (£18,048.43), David Scorey of Essex Court Chambers (£9,120), Martin Fodder of Littleton Chambers (£2,250), Orlando Gledhill of One Essex Court (£22,125), Stephen Ruttle QC of Brick Court Chambers (£256.50) , Thomas Munby of Maitland (£330) and Paul Stanley of 24 Lincoln’s Inn Fields (£15,780).
It is unclear how much of these amounts have been paid back to the creditors, but Gledhill has been paid back in full, and it is understood that Murray is no longer a creditor.
The UK LLP owes £3.8m to HMRC for unpaid tax, but the report states that the Revenue may ultimately become a creditor of the Services entity as tax is a payroll matter.
Meanwhile, the filings show that legal costs, including to CMS Cameron McKenna, totalled £41,200, while the administrators’ fees totalled £182,982.43 for the UK LLP and £28,414.45 for the Services company. Administrators’ fees averaged £375 per hour for 487 hours for the UK LLP and £278 per hour for 101 hours for the Services company, with top partner rates for both at £658 per hour.
The UK LLP’s accounts receivable on 28 May, when the administrators were appointed, were roughly £5.6m, while work in progress (WIP) was £4.7m. It is pursuing WIP worth £1.2m and had realised £1.25m of debts at the time the report was published.
Separately, the filing reveals a dispute over an unspecified lease related to fixtures and fittings in the firm’s Minster Court office in London, claiming that “a third party purports to have entered into lease agreements in respect of a large proportion of these assets” and that is is “not clear on what basis the UK LLP entered into, or even had knowledge of, the lease agreements”.
The report also discloses action taken by staff of the firm’s Paris office who took proceedings to seize control of the balances in the bank after employees were not payed in April or May 2012.
The filings claim that the French office was not profitable and relied on funding from the UK LLP, and that this could not be maintained when the firm entered its crisis in the spring. In addition, the proposals state that the Paris office’s only equity partner was admitted to hospital in May, making the situation difficult.
Both London and Paris staff may have preferential claims, with the London claims resulting from unpaid holiday pay, according to the report. These claims total £420,000, with the administrators stating that there may be enough funds after costs to pay this.