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Bankruptcy Plan for Dewey Headed to a Vote
Two important documents in the Dewey & LeBoeuf bankruptcy plan have been approved by a judge overseeing the Chapter 11 case, which means that the plan is still on track for final confirmation, according to The Am Law Daily. With the approval of the documents, now Dewey’s creditors can weigh in on the case. The documents were approved late in the day on Monday.
The Chapter 11 plan, which is 150 pages long, describes how the estate for Dewey is going to maximize its remaining assets. The plan also outlines how the creditors, who are owed over $600 million, will be paid. Court hearings have led some to believe that unsecured creditors will recover very little money.
During a hearing last week, U.S. bankruptcy court judge Martin Glenn was reserved regarding some of the provisions found in the two documents that he approved in the case. One of those provisions details how much liability former partners at the firm have in terms of claims related to Dewey if they signed into a partner contribution plan that would have requested them to contribute anywhere from $5,000 and $3.37 million each. If they had agreed to such a deal, the partners would have been given assurance from the firm’s estate that they would not be sued in the future.
There is a footnote in the disclosure statement that claims the advisers of Dewey are planning to raise over $67 million from former partners at the firm. The edited Chapter 11 bankruptcy plan says that claims that do not belong to the firm’s estate can actually still be filed. The revised plan also notes that ex-partners can be found liable for their proportionate share of any of these claims.
Another provision that Judge Glenn was concerned about was one Glenn deemed to be incomplete. The provision was the firm’s plan to return client files and unwillingness to pay for costs associated to the destruction for unclaimed files. The plan from Dewey was revised to mention that it has received budget approval to cut the unclaimed portion of 345,000 boxes of files being held in a storage facility.
Glenn set forth a schedule in his order Monday that provides creditors time to vote on the proposed plan. They have until February 11 to vote and provides any party with interest in the Dewey bankruptcy until February 13 to file any objections they might have. The confirmation hearing will be held on February 27. The firm filed for bankruptcy on May 28 of 2012.