The bankruptcy team of Dewey has been trying to recoup money from former partners in an effort to pay its creditors and avoid potential clawback claims the estate would otherwise need to bring against its former partners and enter lengthy legal battles. The proposal of settlement made by the Dewey estate has been forwarded to some 672 former partners, who have been asked to contribute sums ranging from $ 5000 to $ 3.5 million.
According to four former Dewey partners who briefed on the proposal, the latest plan includes discounts on individual contributions based on amounts the firm actually recovers, and amounts it manages to recoup from former clients, on its outstanding bills. According to the former partners who requested anonymity, the new terms were discussed with them during a private conference call.
Three former Dewey partners said that subject to a maximum discount of 5%, partners who collect a certain amount of outstanding receivables from clients through September 15, would be eligible for an alternative discount. Thursday’s incentives are intended to boost the total recoveries of the firm. While the estate needs to recoup at least $ 50,000,000 to submit the settlement for court approval, the estate has set a target of recouping $ 65 million-$ 70 million. If this target is achieved, then the contributions of partners could be discounted by 2.5% and it could go up to 5% if the target of recouping $ 70 million was achieved.
The settlement offered by Dewey to its partners has already undergone three major revisions and consequently has been delayed thrice. The most recent date by which settlement is sought is August 14.
Also on Wednesday, a group of 54 retired partners and spouses of deceased partners, asked the bankruptcy judge to appoint an independent trustee or examiner. The retirees were former partners at LeBoeuf, Lamb, Greene & MacRae before that firm merged with Dewey Ballantine in 2007. The LeBoeuf Lamb retirees questioned the legal basis for the estate’s demand that they pay back their pension earnings since January 2011, when they were not active partners at Dewey.
Donald Greene, a former chairman and name partner at LeBoeuf Lamb, said “it is an outrage that the retirees are being asked to return pension payments, earned for those many years of service, while some of the partners who caused the failure of the firm are not being held fully accountable.”