The estate of defunct New York-based global law firm Dewey & LeBoeuf put the final touches on Thanksgiving eve to a deal designed to pay back some of the $600 million owed to creditors – but the firm’s retired partners remain a potential stumbling block.

As travellers across the US headed home at the end of last week for traditional roast turkey dinners and an intense dose of American football, the firm’s bankruptcy team highlighted that they had finally cut a deal with about 400 ex-partners to contribute some $71.5 million to the scheme.

Secured creditors

According to a report today on the AmLaw Daily web site, most of that cash will go to the firm’s secured creditors; indeed, the site claims the bank JP Morgan Chase – the firm’s principal lender -- is owed as much as $260 million, and will therefore recoup only a percentage. The report points out that businesses involved in property or equipment leases with Dewey are understood to have filed an additional $44.5 million in secured debt claims.
In addition, there is thought to be as much as $285m in unsecured debt, with those creditors getting whatever scraps are deemed left once the secured creditors have had their share.

Retired partners

Meanwhile, AmLaw Daily reports on a court application last week by lawyers for the Dewey estate to wind up a trustee-appointed committee that was formed to protect the interests of the firm’s retired partners. According to the report, estate lawyer Albert Togut of New York-based corporate bankruptcy specialist law firm Togut Segal & Segal, told the court: ‘It is an understatement that the former partners committee has not been a positive force in the case.’
The retirees’ committee has vociferously objected to the partnership contribution deal.