Banks that issued professional practice loans to Dewey & LeBoeuf partners to fund their capital contributions are negotiating an extension to the debt.
Former partners of the US firm are facing pressure from lenders in the wake of the firm’s collapse, with a US partner announcing in a conference call last week that Citibank had pursued him for his loan.
Barclays and Citibank are attempting to restructure their loans to extend the amount of time partners have to repay them, with one partner suggesting that the extended period could be a few years.
The loans – used to cover the 36 per cent of annual target compensation partners paid into the business when an individual joined the partnership – are due when partners leave the firm.
Houston energy partner Steven Otillar told former partners on a call last week that he had been pursued by Citibank for his loans. However, it is understood that Barclays has been marginally less generous that Citi in its restructuring terms.
The issue was discussed in a conference call for former partners last week in which the wind-down team presented a settlement deal that would see partners pay an amount to the estate in exchange for removal from future liability (20 June 2012).
One factor affecting the banks’ willingness to extend repayment periods is thought to be the quality of the role ex-partners have clinched at a new firm, with partners who have found secure jobs at another firm considered more likely to pay up sooner.
A former partner said: “They want to know you have the ability to pay. [Then] they may be happy to extend it over a longer period.”