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Judge OKs $19.5 million Dewey mismanagement deal

Former firm chairman Steven Davis will pay $511,145 of the total, with the rest coming from the firm’s insurer

Former Dewey & LeBoeuf Chairman Steven Davis is off the hook for mismanagement claims brought by the storied firm’s estate in connection with its May 2012 bankruptcy.

A federal judge on Thursday approved a settlement in which Davis and Dewey’s insurance company, XL Specialty Insurance, will pay a combined $19.5 million to settle claims that Davis mismanaged the law firm into bankruptcy. The lion’s share of the settlement will come from the insurer, with Davis on the hook for only $511,145.

The money will go to Dewey’s secured creditors, including JP Morgan Chase & Co., along with unsecured creditors such as the Pension Benefit Guarantee Corp., Thomson Reuters reports. Creditors have already recovered $71.5 million in a separate clawback settlement, in which former Dewey partners agreed to return between $5,000 and $3.5 million of their compensation in return for immunity against future lawsuits connected with the firm’s Chapter 11.

Davis did not admit wrongdoing as part of the settlement, instead maintaining that “he fulfilled his fiduciary duties and at all times acted in what he reasonably believed was in the best interest of Dewey.”

For more InsideCounsel stories about Dewey’s bankruptcy, see:

Former Dewey & LeBeouf chairman agrees to settle mismanagement claims

Dewey liquidation plan wins court approval

Dewey will pay to shred old client files

Dewey creditors can pursue claims against firm execs, judge rules

Dewey trustee objects to proposed $165,000 bonus

Former Dewey partner accuses Citibank of concealing firm’s financial troubles

Infographic: The timeline of Dewey’s downfall

Former Dewey partner sues management, claims they were “running a Ponzi scheme”

 

Alanna Byrne

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