July 30 (Reuters) - Dewey & LeBoeuf largely won approval
Monday of a plan to pay up to $700,000 in retention and
incentive bonuses in an effort to encourage a dwindling number
of employees to stay at the defunct law firm.
U.S. Trustee Tracy Hope Davis had objected to the plan,
saying the firm hadn't shown the plan was "economically
feasible" or justified. But U.S Bankruptcy Judge Martin Glenn on
Monday said the costs were reasonable given what would happen if
its remaining employees, who number fewer than 50, left.
"The [U.S. Trustee] may not substitute its business judgment
for that of the Debtor's," Glenn wrote.
A spokeswoman for Dewey's chief restructuring officer
declined comment. A representative for Davis did not respond to
an e-mail seeking comment.
Dewey has been winding down since filing for Chapter 11 in
May. Once a firm of 1,400 lawyers globally, today it has just a
handful of employees left, who are helping Dewey collect bills
and dispose of hundreds of thousands of client files.
Employees have been leaving at a rapid pace, and Dewey has
acknowledged there are no prospects for long-term employment at
the firm. Dewey's headcount had dropped to 52 when it pitched
the bonus plan earlier in July, and it has lost at least four
more people since.
Glenn said Dewey's ability to collect receivables and wrap
up business "will be a much less achievable goal if is
unable to stem the tide of employee departures."
Under Dewey's retention plan employees will be eligible for
extra pay if they stay with the firm past certain dates. A
related incentive plan for three collections employees will
provide similar perks.
Glenn did reject one aspect of Dewey's retention plan, which
would have provided up to $100,000 in discretionary funds to pay
employees. Glenn said Dewey could make the pitch again after
providing specific guidelines for how it would distribute those
extra funds.
The case is In Re Dewey & LeBoeuf LLP, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12321.
(Reporting by Nate Raymond)
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