| NEW YORK
NEW YORK Feb 27 A federal bankruptcy judge
approved the liquidation plan for Dewey & LeBoeuf on Wednesday,
a milestone in the winding down of the collapsed law firm that
paves the way for creditors to recover tens of millions of
U.S. Bankruptcy Judge Martin Glenn said on Wednesday that
the bankruptcy plan is in the best interests of the creditors
and the estate.
"It is remarkable that only nine objectors filed (motions
against the plan) as of today, and nearly all of them are
resolved," said Glenn of the swift nature of the bankruptcy
proceedings in New York.
Dewey & LeBoeuf, which once employed more than 1,000 lawyers
in 26 offices worldwide, last year 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
Under the bankruptcy plan, more than 450 former partners
agreed to pay the estate at least $71.5 million in exchange for
a release from potential litigation. Those funds will now go to
satisfy secured lenders such as JPMorgan Chase & Co,
which have a total of $262 million in claims against Dewey, and
an unknown amount from unsecured creditors. One unsecured
creditor, the Pension Benefit Guarantee Corp, has a $120 million
The estate potentially could also collect money from the
firm's $50 million management liability insurance policy, which
covers the actions of Dewey's former leaders.
Secured lenders are expected to receive 80 percent of the
initial $67.5 million the estate collected from partners, while
unsecured creditors, which include landlord Paramount Group and
Thomson Reuters Corp for legal research, are expected
to receive 20 percent of that amount, according to the plan.
Any payments by partners to the settlement after the $67.5
million mark is met are expected to be split between secured and
unsecured creditors, according to the plan.
In the months leading up to the Wednesday confirmation
hearing, dozens of partners had objected to the bankruptcy plan
on grounds it favored high earners. Separately, retirees
objected and said they shouldn't have to pay because they were
not responsible for the firm's demise and were owed retirement
By Wednesday, however, many of those objectors had opted
into the plan, saying that the cost of litigation outweighed
their interest to continue to fight the plan.
"This was a difficult decision," said Annette Jarvis, a
lawyer representing a group of retirees who had previously
objected to the settlement but decided to opt in before
Wednesday. "However, there comes a point when you look at the
economics of where you're at."