A PROPOSED $90.4m (£57.5m) settlement with former Dewey & LeBoeuf partners designed to raise much-needed cash for the collapsed firm's creditors is set to move forward, according to an email sent to partners afternoon and obtained by The Am Law Daily.
Dewey's chief restructuring officer, Joff Mitchell of Zolfo Cooper, wrote in the two-sentence email: "I am pleased to advise that, as of 2.45pm today, [16 August] we have received signed settlement agreements with commitments for over $50m (£31.8m) from former Dewey partners. The threshold for us to take the partner contribution plan to the creditors and the Bankruptcy Court for approval has now been crossed."
In a second email sent later that afternoon, Mitchell reminded partners that "for those of you that have yet to sign your settlement agreements, remember that if you miss the deadline and want to join the settlement at a later time, there is a 25% premium on your PCP contribution amount," Accountancy Age's sister publication Legal Week reports.
Mitchell sent the emails ahead of a 5pm (New York) deadline for them to sign up to the settlement plan – and a day after he and lead Dewey bankruptcy counsel Al Togut met with the firm's unsecured creditors to update them on the status of the Chapter 11 case. Dewey filed for bankruptcy protection on 28 May in the US.
The firm's UK LLP, which also includes the Paris office, was placed into administration in May, with BDO business restructuring partners Mark Shaw and Shay Bannon appointed as joint administrators.
Mitchell and Togut expressed confidence at Wednesday's unsecured creditor meeting that the plan would garner the required support by yesterday's deadline, despite acknowledging that only about 160 of 672 potential participants had signed up by that point.
Speaking after the meeting, Mitchell said he was "heartened" by the commitments the Dewey estate had received as of Wednesday and noted that many of those who appeared uninterested in taking part in the settlement were not among the firm's top earners.
The partner contribution plan calls for former partners to return between $5,000 (£3,200) and $3.5m (£2.2m) apiece in excess compensation received in 2011 and 2012, as well as additional money related to tax advances and unpaid capital contributions. In exchange for making payments to the estate, participants will receive waivers from Dewey-related liability if the plan wins court and creditor approval. Those who opt out could end up being sued by the Dewey estate.
The email arrived in partners' in-boxes shortly after legal blog Above the Law posted a story with what it characterised – without identifying the source – as a partial list of the firm's top earners in 2011 and 2012, including how much they made, and how much they are being asked to contribute to the settlement plan.
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