An attorney representing a group of former Dewey & LeBoeuf partners argued against a proposed clawback settlement with the defunct firm in a hearing Thursday, questioning members of Dewey’s wind-down team about their alleged interests in the deal.
Last month, more than 450 of the firm’s 672 ex-partners reportedly agreed to pay between $5,000 and $3.5 million each in a clawback settlement that would release them from future lawsuits. If U.S. bankruptcy court judge Martin Glenn approves the deal, Dewey’s estate stands to recover $71.5 million from the deal, which will go toward paying down its $560 million debt.
But not all of Dewey’s partners agreed to the proposal. Attorney David Friedman, who represents a group opposed to the settlement, has argued that the team in charge of winding down Dewey’s operations includes former members of the firm management, who some partners blame for Dewey’s collapse.
On Thursday, Friedman questioned Joff Mitchell, the firm’s chief restructuring officer, and Paul Gendler, a member of the firm’s unsecured creditors committee, about the clawback settlement and their efforts to investigate potential legal claims against Dewey’s former executive team.
Friedman also accused the wind-down team of catering to former partners who are pushing for a quick settlement, specifically referencing an email to Mitchell from Dewey’s former bankruptcy head, Martin Bienenstock.
"I doubt the lenders will fund chapter 11 too much longer,” the email reads. “But, even if they do, I hope you will promptly move for approval of the settlement while [Dewey] controls the estate's causes of action. This is the only way it can work and the only way it can be done soon. It doesn't matter if [the unsecured creditors committee] objects.”
A group of former partners also has asked Judge Glenn to appoint an independent examiner to oversee the firm’s Chapter 11 proceedings.
Read more at Reuters.
For more InsideCounsel coverage of Dewey, see: