A bankruptcy trustee recently rejected Dewey & LeBoeuf’s proposal to pay remaining workers up to $700,000 in bonuses, but that hasn’t stopped the bankrupt firm from shelling out for several high-level employees.
Since filing for Chapter 11 bankruptcy on May 28, Dewey has paid $190,000 to executive partner Stephen Horvath, who is supervising the bankrupt firm’s wind-down. According to a court filing Friday, the payment compensates Horvath for work done between the bankruptcy filing and the end of June (an annual rate of nearly $2 million). He also was reimbursed for $23,563 in expenses.
Other high-level employees making bank include general counsel Janis Meyer, who earned $56,000, and director of finance Frank Canellas, who pocketed $33,333. The filing also noted that former partners in the firm’s Frankfurt office received an unauthorized payment of $76,466 on May 29, though it does not specify who made the payment.
Meanwhile, the firm has managed to recoup some outstanding fees from clients: The filings show that the estate has collected $19.3 million thus far and paid out $5.7 million in expenses. In total, the firm owes creditors between $245 million and $315 million.
In a Monday filing, the firm said that it was bleeding employees, 48 of whom remain to wind down the firm. "Every employee knows this is a liquidation case with a limited employment opportunity for them," the filing said. "It is also known that is living month to month on the use of cash collateral. [Dewey's] need to stem further employee attrition is greater now than ever." Last week, a U.S. bankruptcy trustee rejected Dewey’s proposal to pay its remaining employees up to $700,000 in incentive and retention pay, saying that the firm had failed to show the plan was economically feasible.
Dewey is also in hot water with some of its former partners, who are unhappy with a proposed clawback settlement that would shield them from future lawsuits in exchange for payments of between $25,000 and $3 million. Facing considerable opposition, Dewey agreed last week to revise the clawback plan.
Read more at Reuters.
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