On Tuesday, Bankruptcy Judge Martin Glenn approved a court filing of Dewey requesting an extension of its funding deadline, which was scheduled to lapse on Tuesday. The extra two weeks Dewey received would help the now defunct law firm some more time to come to a settlement with its former partners and avoid protracted legal battles. Judge Glenn extended the funding deadline of Dewey to Aug.15 as the request also had support from Dewey’s lenders who are allowing the firm to use money pledged to them as collateral.
Dewey is trying to claw back proceeds of “unfinished business” as well as payments made to its former partners in an effort to pay back creditors of the firm. Currently, Dewey has offered a revised version of its original offer for settlement made to former partners. The initial offer for settlement had a target amount of $104 million. Under the new offer, payments made by former partners would range between $5000 and $3.5 million with a maximum targeted recovery amount of $90.4 million.
If the settlement talks fail this time, it is highly unlikely that Dewey’s lenders would continue to fund the Chapter 11 bankruptcy, and it is possible that the case would be converted to liquidation under Chapter 7. Under Chapter 7, a court-appointed trustee would take control of the assets of the firm and would initiate and pursue claw-back claims.
Under the initial settlement offer made by Dewey to its former partners, the deadline had been sent for July 24. However, considering issues raised by former partners, the firm altered the offer of settlement and asked its lenders and the court for an extension.