Home

Court Denies Dewey Lenders Lien over Future Proceeds
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

On Tuesday, U.S. bankruptcy Judge Martin Glenn frustrated the tactics of big lenders to secure their interests over the interests of investors and those who bought Dewey debts in the secondary market. In a classic ploy, JPMorgan Chase and other lenders offered to permit Dewey fund its bankruptcy using their cash collateral.

The terms, however, were that in exchange of the ‘help’ the lenders wanted a lien on the proceeds of future litigation. The judge refused to step into the trap. Doing so would have amounted to putting the interests of banks over the interests of others who had bought Dewey’s debts in the secondary markets. Had the banks been so kind earlier and so keen to ‘help,’ then extending the loan deadline by six months may have prevented catastrophe and allowed the firm to recuperate.

As it is, with the Coudert Brothers’ judgment influencing decisions, partners who had deserted the firm and their new employers are concerned over clawbacks.

  
What
Where


On Tuesday Attorney Albert Togut, speaking before the court on behalf of Dewey hinted that a deal with ex-partners is on the talks and that it could cost former partners a “significant” amount of money. Togut said, “Our goal is to get to a negotiated settlement, and bring in money without the staggering fees that you see in case after case in these law firm bankruptcies.”

The court held that the demands of the banks for a lien over Dewey’s future proceeds were unreasonable, but noting the kindness and keen attitude of help proffered by JPMorgan and others, the court ordered the parties to negotiate new terms.

In exchange of allowing Dewey to use its cash collateral, JPMorgan and others wanted a lien on avoidance actions and tried to secure their interests from being affected by clawbacks. It is pertinent to note that the greater portion of the firm’s debts had traded at a discount in the secondary markets and are in the hands of unorganized investors who purchased it. If the demands of the banks had been granted then it would have led to a situation where future proceeds would have first been used to pay up the banks, and the leftovers left for other market investors.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




The case is In re Dewey & LeBoeuf LLP, U.S. Bankruptcy Court, Southern District of New York, No. 12-12321.





 

RELEVANT JOBS

Legal Assistant

USA-MI-Port Huron

We are looking for a self-motivated Legal assistant to ensure the smooth running of the office and e...

Apply now

In-House Counsel- Corporate Attorney

USA-NJ-East Brunswick

We are looking for an energetic business savvy attorney to join our team of highly motivated and har...

Apply now

Corporate Transactional Attorney - Partner Level - REMOTE

USA-NY-New York City

DBM LEGAL SERVICES – BUSINESS ATTORNEY  REMOTE OVERVIEW  DBM is assembling ...

Apply now

Partner

USA-NY-New York City

Duncan Bergman Mandell LLC is an innovative law firm providing clients with premier corporate and tr...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

Associate Attorney needed for Los Angeles office

USA-CA-Los Angeles

Los Angeles office of a BCG Attorney Search Top Ranked Law Firm seeks an associate attorney with 1-4...

Apply Now

Bankruptcy Associate Attorney

USA-MA-Boston

Boston office of a BCG Attorney Search Top Ranked Law Firm seeks a bankruptcy associate attorney wit...

Apply Now

Bankruptcy Associate Attorney

USA-CA-Los Angeles

Los Angeles office of a BCG Attorney Search Top Ranked Law Firm seeks a bankruptcy associate attorne...

Apply Now

SEARCH IN ARCHIVE

To Top