One of Dewey & LeBoeuf’s bankruptcy plans was to get partners to pay back some of the money they made in 2011 and 2012 in order to gain immunity from clawbacks. In order for the plan to work, enough partners must agree to participate so that their pooled amount exceeds $50 million. Individual partners are expected to pay between $25,000 to $3 million apiece, to avoid clawbacks, where debtors can sue former partners for money after a firm declares bankruptcy. But not enough have signed up, for various reasons, and the initial July 24 deadline has been backed up to August 7 to give time to explain how the proposal has been modified to make it more palatable.
The AM Law has received a copy of the email that explains the modifications and they quote it as saying that after “hearing certain widely held partner concerns with which we agree,” they have modified the partnership contribution plan. “We have persuaded the secured lenders to give us time to explain these changes to you and are able to extend the deadline to sign on to the PCP by two weeks to August 7th.”
The new plan is set to be explained on July 26 at 3 p.m. at which point New York partners will gather, and the distant partners will join in through the internet.
Partner concerns are that the previous plan favored high earners over lower earners; that they haven’t even received a copy of the forms that give its details; that the British partners are going through their own distinct mode of bankruptcy, so shouldn’t be expected to participate; and that the percentage calculation of money earned in 2011 and 2012 unfairly charges partners more who happened to have received delayed profits from years before.
The new plan hopes to address all these concerns and persuade enough partners to sign in on the plan to make it legitimate.