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Large Bonus in Dewey Wind-Down Again Faces Opposition
Dead, but not gone, the Dewey wind-down continues to draw attention of the media, and would continue to draw attention of researchers even decades after. Right now, the demise and dissection of the fortunes of Dewey & LeBoeuf remain of extreme interest to other lawyers and law firms, whether directly affected or not by Dewey’s demise. So, when on Thursday, the U.S. Trustee in the Dewey bankruptcy objected to the payment of bonus to an estate employee who helped in the winding down of the law firm, it makes news we need to cover.
On Thursday, Hope Davis, the U.S. Trustee in the matter and representing the U.S. Justice Department objected to a bonus amounting to $165,000 which Dewey’s chief restructuring officer Joff Mitchell proposed for the estate’s director of finance, Frank Canellas.
Earlier this month, Mitchell had stressed that if Canellas, collections manager Lisa Sucoff, and director of billing Lourdes Rodriguez did not receive the proposed bonuses they would possibly find employment elsewhere, “leaving (Dewey) without essential services during this and other important periods in the case.” However, though the U.S. trustee did not object to the payments for Sucoff and Rodriguez, which were only $5000, and $50,000 respectively, he found the proposed bonus for Canellas sufficient to object.
Davis said it was the bonus for Canellas was inappropriate, as he was an “insider” at Dewey and a part of its formal senior management team. Davis cited a section of the bankruptcy code to point out that no bonuses can be given to an insider unless he has an existing job offer from another business to prove the bonus was essential for continuing to retain his services. And, in this case, Davis said Canellas had not yet shown in court filings that he had a “bona fide” alternative job offer.
The U.S. trustee also pointed out that if Canellas’ bonus was approved, then his compensation for 2012 would exceed his firm earnings in 2011, when Dewey was fully functional. In 2011, Davis said, Canellas made $615,000 at Dewey, but if the bonus was approved, his compensation this year would be $665,000.
The case is In re Dewey & LeBoeuf, U.S. Bankruptcy Court, Southern District of New York, No. 12-12321.