By Nate Raymond
Nov 23 (Reuters) - Dewey & LeBoeuf filed papers seeking
approval of its liquidation plan with a federal bankruptcy court
on Wednesday, the latest step in the wind-down of the storied
U.S. law firm.
The liquidation plan, filed in U.S. Bankruptcy Court in
Manhattan, came almost six months after Dewey filed for Chapter
11 bankruptcy protection amid partner defections, soaring debt,
and internal disputes over compensation.
In October, U.S. Bankruptcy Judge Martin Glenn approved a
settlement between Dewey's estate and 400 of its former partners
who agreed to return $71.5 million in compensation in exchange
for being released from further claims.
But the settlement is just the first step in recovering an
estimated $500 million Dewey owes to its creditors.
If the liquidation is approved, secured lenders including
JPMorgan Chase & Co, will have $261.9 million in allowed claims,
according to the filing, and another $100 million in claims that
the plan would treat as unsecured.
The secured lenders will be first in line to receive any
money recovered through Dewey's accounts receivable or through
the wind-down of its foreign offices. Dewey's most recent
operating report lists $218.6 million in accounts receivable,
though 79 percent of them are more than 90 days old.
The secured lenders will also receive 80 percent of the
first $67.5 million recovered by Dewey from the partners'
The liquidation plan has a different approach for other
secured creditors, who are owned money related to equipment
leases and personal property. To date, those secured creditors
have filed $44.5 million in claims, the disclosure statement
Unsecured creditors have meanwhile filed $284.9 million in
Under the proposed plan, future any settlements with
partners or with other law firms would be split 50-50 between
the secured and unsecured creditors.
Approximately 230 former partners did not yet agree to
participate in the settlement, which required partners to return
between $5,000 and $3.5 million each.
Future settlements also could include any recoveries Dewey
earns pursuing up to $60 million in so-called unfinished
business claims, in which the firm's estate could move to
recover profits on legal business ex-partners took with them to
their new law firms.
Dewey, once of the largest law firms in the U.S., is seeking
a hearing on the liquidation plan Jan. 3 and is aiming to have a
hearing on its confirmation on Feb. 27.
A spokeswoman for Zolfo Cooper, the restructuring firm
advising Dewey, declined 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.
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