Dewey & LeBoeuf LLP, after imploding last year in the largest law firm bankruptcy, won confirmation of its plan to set up trusts to liquidate its remaining assets.
More than $71 million will be returned to the estate by participating former partners under the plan, an agreement described as a “cornerstone” to the deal by restructuring officer Jonathan Mitchell. U.S. Bankruptcy Judge Martin Glenn in New York approved confirmation of the plan during a hearing today.
“This plan is a tribute to the partners coming together,” Al Togut, Dewey’s chief bankruptcy lawyer, told Glenn during the hearing. “Chapter 11 works best when its consensual and this case is living proof that is right.”
Dewey filed for protection from creditors on May 28 marking the biggest bankruptcy in the legal business. The firm, based in New York, fell apart in a matter of weeks last year after ousting its chairman and watching virtually all its partners quit for competing firms.
The product of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green and MacRae, the firm at one point had more than 1,300 attorneys in 12 countries.
At the outset of bankruptcy, there was secured debt of about $225 million and accounts receivable of $217.4 million, the firm said. The petition listed assets of $193 million and liabilities of $245.4 million as of April 30.
The secured lenders and the unsecured creditors committee reached an agreement that was based around the so-called partner contribution plan, Mitchell testified today. Without the partners plan, Dewey’s liquidation would have little hope for success, Mitchell said.
The plan agreement incorporates about 440 former partners. Glenn today approved a separate agreement with 76 retired partners who will return a total of $490,000 to the estate, Togut said. The group includes partners who had either retired in prior years or left the firm before it went out of business.
Glenn also approved settlements with former partners of the firm’s U.K.’s office, who agreed to return $900,000. Roughly $650,000 of that amount will return to the U.S. estate.
The case is In re Dewey & LeBoeuf LLP, 12-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan)