By Casey Sullivan
NEW YORK, Sept 20 (Reuters) - An attorney for former Dewey &
LeBoeuf partners opposed to a $71.5 million settlement with the
estate of the bankrupt law firm on Thursday grilled its chief
restructuring officer about the legitimacy of the proposed pact.
During a three-hour hearing before U.S. Bankruptcy Judge
Martin Glenn, attorney David Friedman questioned Joff Mitchell,
who is charged with unwinding Dewey's estate, about his
impartiality in crafting the settlement.
More than 450 of 672 former Dewey partners as well as
creditors who claim they are owed more than $500 million support
the settlement, which would require the attorneys to return
$71.5 million in back compensation in exchange for being
released from potential clawback claims. If approved by Glenn,
the partners would have to pay between $5,000 and $3.5 million
Some former partners who object to the settlement have asked
Glenn to appoint an independent trustee or examiner to
investigate its fairness.
Friedman pointed out that any decision Mitchell made needed
to be approved by Dewey's wind-down team, which is comprised of
some of the firm's former leaders. Friedman cited a July 12
email sent to Mitchell by former Dewey bankruptcy head Martin
Bienenstock in which he tried to persuade Mitchell to reach a
quick resolution with the estate.
"I doubt the lenders will fund chapter 11 too much longer,"
Bienenstock wrote. "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. That is the only way it
can work and the only way it can be done soon. It doesn't matter
if (creditors) object."
Mitchell told Friedman he had never replied to Bienenstock's
email. He stood behind the proposed settlement, which he
described as "rough justice." He said that Dewey's wind-down
team had interviewed more than 400 former partners and counsel
in preparing the deal.
Friedman opposed the pact in August, because of the
composition of the Dewey wind-down team. He said it was managed
by lawyers who had advised the firm before its collapse and had
given high earners at Dewey preferential treatment when crafting
During Thursday's hearing, Friedman also questioned Paul
Gendler, a member of Dewey's unsecured creditors committee,
about why he chose to support the settlement, which excludes
three of the firm's top executives, including former chairman
The Manhattan District Attorney's office in April launched
an investigation into possible financial improprieties by Davis,
who has denied any wrongdoing. The office did not immediately
return a request for comment on the status of the investigation.
Gendler, whose company Winthrop Resources Corporation is
owed $43 million, said he had relied on information provided by
the firm's wind-down team, which told him that "the folks that
were really responsible for setting the tent on fire are the
three folks who are excluded from the (settlement)."
Dewey once employed more than 1,000 lawyers in 26 offices
worldwide, but in May it became the largest U.S. law firm to
file for bankruptcy. Its demise has been largely attributed to
compensation guarantees the firm made to a significant portion
of its partners.
Bienenstock did not return a request for comment. The
testimony will resume on Friday.
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