By Casey Sullivan
Nov 13 (Reuters) - In an effort to recover funds lost in the
bankruptcy of Dewey & LeBoeuf, a committee of creditors on
Monday requested approval from U.S. Bankruptcy Judge Martin
Glenn to pursue claims against three former managers of the
failed New York law firm.
Ed Weisfelner, a lawyer for Dewey's unsecured creditors
committee, asked Judge Glenn for approval to pursue claims
against former Dewey Chairman Steven Davis, Chief Financial
Officer Joel Sanders and Executive Director Steven DiCarmine for
allegedly mismanaging the firm and causing its demise.
Dewey & LeBoeuf, which once employed more than 1,000 lawyers
in 26 offices worldwide, in May became the largest U.S. law firm
to file for bankruptcy. Its demise has been largely attributed
to compensation guarantees the firm's leaders made to many
Weisfelner said in court papers that the three former
executives "breached their fiduciary duties of care, loyalty and
candor by recklessly doling out individual partner contracts
that guaranteed compensation without regard to future
Weisfelner said he intends to pursue $50 million in
management liability insurance policies that covered the three
former executives' actions in their respective roles at Dewey &
The policies were written by a handful of insurance
companies. They include XL Insurance of Dublin, Ireland,
Minnesota-based OneBeacon Insurance Group and Bermuda-based
Iron-Starr Excess, according to documents filed in New York
bankruptcy court. Representatives for those companies did not
immediately respond to a request for comment.
If approved, the pursuit of claims against the three former
executives would mark another attempt to recoup a portion of the
more than $700 million that secured and unsecured creditors
claim they are owed in the Dewey bankruptcy.
In early October, Judge Glenn approved a $71.5 million
settlement between former partners of Dewey & LeBoeuf and the
bankrupt law firm's estate, marking the first significant
recovery for creditors. Its unclear how that money will be
allocated among creditors, since the Chapter 11 reorganization
plan hasn't yet been laid out.
Unsecured creditors claim they are owed more than $500
million from Dewey while secured creditors, a group that
includes JP Morgan Chase, claim they are owed more than $260
million, according to the Monday filing.
Some of the largest unsecured creditors include Pension
Benefit Guaranty Corp. for underfunded pensions, Dewey's former
landlord Paramount Group and Thomson Reuters for legal research.
Joff Mitchell, the chief restructuring officer for the Dewey
estate, declined comment on Monday, as did Weisfelner. Ned
Bassen, an attorney for the three former Dewey leaders, did not
immediately return a request for comment.
The case is In re Dewey & LeBoeuf, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12321.
For Dewey: Al Togut of Togut Segal & Segal.
For Unsecured Creditors Committee: Edward Weisfelner of Brown
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