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Former Dewey & LeBoeuf Partner Challenges Capital Loan Liability
Charles Landgraf, the former managing partner of the Washington office of Dewey & LeBoeuf, successfully challenged his liability for a capital loan made by Barclays Bank. The U.K. High Court rejected Barclay Bank’s petition for summary judgment in the matter and opined there was sufficient ground to believe that Landgraf would be able to prove his assertions.
Landgraf was one of the last four lawyers who led the office during the last days of Dewey & LeBoeuf, trying to hold morale together. He was also a vocal critic of the management’s inequitable policies. Barclays’ sued to recover the $486, 000 paid into the dying law firm’s account as partnership capital on behalf of Landgraf.
But Landgraf maintains, among other assertions that the money was actually aimed at keeping the law firm afloat, and the bank is playing foul.
The agreement said on its face that the money was “to assist the borrower with a partnership capital subscription,” but, Landgraf proved, his capital account – which should have been one third of his annual compensation – was always maintained, and he did not need a loan to meet his obligations.
Landgraf asserted that when Dewey fell on financial troubles, he was approached by the firm’s management and made aware of the Barclays Capital Loan Program, or BCLP. He claims he was told the BCLP was an instrument through which the firm could substitute its bank debt in the capital account and the burden of repaying the capital and interest of any loans was that of the firm, and not of the individual partners.
However, after the Dewey & LeBoeuf went bankrupt, Barclays Bank turned around and said the individual partners would have to bear the liability of repaying the loans.
While dismissing the application of Barclay’s Bank for a summary judgment, the court observed, “it is not fanciful to think that, with the benefit of disclosure, the position at trial may well be that Mr. Landgraf can show that all concerned, including the bank, knew that the true purpose of the loan was to provide the firm with the liquidity which it required to meet its day-to-day liabilities, not to enable him to make a capital contribution to the firm under the provisions of the partnership agreement.”Former Dewey & LeBoeuf Partner Challenges Capital Loan Liability by Scott