According to a report from Reuters, a group of creditors requested approval from U.S. Bankruptcy Judge Martin Glenn to go after claims against three ex-managers of Dewey & LeBoeuf so they can recover money lost in the firm’s bankruptcy.
The request for approval was filed by the lawyer for Dewey’s unsecured creditors committee, Ed Weisfelner. Weisfelner asked Judge Glenn to go after claims against Steven Davis, the former Dewey chairman. Also named in the request were former Executive Director Steven DiCarmine and former Chief Financial Officer Joel Sanders. The request was filed against these former employees for allegedly mismanaging the firm and ultimately causing it to collapse.
In court documents, Weisfelner said that the three former execs “breached their fiduciary duties of care, loyalty and candor by recklessly doling out individual partner contracts that guaranteed compensation without regard to future performance.”
Weisfelner noted that he is going to pursue $50 million in management liability insurance policies that were issued for the three former execs and their actions in the roles that held at the firm. The insurance companies that wrote the policies include OneBeacon Insurance Group from Minnesota; XL Insurance from Dublin, Ireland and Iron-Starr Excess from Bermuda.
Should the request be approved by Judge Glenn then it would be another step in an attempt for lawyers to reclaim some of the $700 million that unsecured creditors and secured creditors claim that they are owed in the bankruptcy case.
A $71.5 million settlement was approved in October by Judge Glenn for former partners of the firm and the firm’s estate. Secured creditors claim they are owed over $260 million and they include JP Morgan Chase. Unsecured creditors claim they are owed more than $500 million and they include Paramount Group, Pension Benefit Guaranty Corp. and Thomson Reuters.
None of the people involved in this filing returned calls for comment when contacted by Reuters for this story.