Nobody said bankruptcy is easy, but when you’re one of America’s largest law firms you can expect it will go down hard. Dewey & LeBoeuf are realizing just that after their Wednesday filing got challenged every step of the way by U.S. Trustee Hope Davis, who shot down their plan to land $700,000 in incentive bonuses for the partners plugging away at dissolving the firm.
“Given that the Debtor has terminated all but fifty-two of its employees, it is unclear to what extent, if any, the Debtor is operating in the ordinary course,” she said, regarding the incentive plan as not being cost-effective. As she sees it, the firm should scrap its current strategy, where they keep on the fifty-two troopers who are billing former clients to collect funds.
She’s already blasted nine of Dewey’s proposals to keep on such advisers as Togut Segal & Segal LLP, at a cost of $7 million, but the judge approved several of them anyway.
As she sees it (and as reported by the Wall Street journal):
Without the May and June Monthly Operating Reports, it is impossible to determine whether the projected $3,901,000 spent on the Employees to date has resulted in the projected collection of the $47,257,000 in accounts receivable, or any net benefit to the estate.
Similarly, the Debtor has not received approval of ran extension of the Final Cash Collateral Order, which terminates on July 31, 2012. At present, it is unknown whether the Debtor will be successful in receiving consent from the Debtor’s secured lenders for an extension. Even if successful, it is unknown to what extent the next budget will support the expenditure of the Retention Plan’s $450,000 cost.
In other words, she wants to see some proof that Dewey’s plans are legit. Things will get even more intense on their next court hearing, July 25.