Daily News: May 29, 2012

Dewey & LeBoeuf Files for Chapter 11; Seeks Orderly Wind Down

The international law firm of Dewey & LeBoeuf LLP announced that in an effort to preserve assets and wind down its business in the most orderly and efficient way possible, it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The filing was made in Manhattan, in U.S. Bankruptcy Court for the Southern District of New York.

Unlike most other Chapter 11 cases, this filing does not anticipate a return to business but rather a managed wind down of affairs, followed by liquidation. Dewey & LeBoeuf expects the most significant portion of the process to be completed in the next few months. In the interim, the firm will be operating on a budget and according to a timetable to be determined by the court.

According to a Wall Street Journal article, more than 300 partners had left the firm by the end of May 2012. The article also noted that the Manhattan District Attorney’s Office launched an investigation into the firm’s activities with regulators suing to take over the company’s pension plans – which are rumored to be underfunded by $80 million.

The WSJ said that Dewey owes about $315 million to over 5,000 creditors. Secured creditors include J.P. Morgan Chase, the firm’s lead agent for a $75 million revolving credit line.

The firm said in a press release that the needs of all of the firm’s law clients continue to be served, mainly by former Dewey & LeBoeuf law partners who have moved on to other firms in recent months.

“We are proud of the dedication and professionalism that has characterized Dewey & LeBoeuf over many years, and we intend to bring the same focus to the unfortunate task of closing out our affairs,” said Stephen J. Horvath, executive partner.

The firm has petitioned the court for permission to continue to pay salaries, benefits and Paid Time Off (PTO) in the ordinary course of business, for current employees, consistent with bankruptcy laws. We expect this permission to be granted within 48 hours following the filing. The firm will ask approximately 90 employees to remain on staff to assist in the wind-down.

Dewey & LeBoeuf continues to enlist the assistance of former partners and associates to help collect accounts receivable owed to the firm. It is in the interest of all parties to cooperate in the fullest possible recovery of such assets.

Dewey & LeBoeuf said that the 401(k) plans and qualified pension plans of its current and former employees and partners are held in trust and cannot be accessed by the firm’s creditors.

Dewey & LeBoeuf has consolidated its operations and intends to sharply reduce the size of the office space it occupies at its headquarters, 1301 Avenue of the Americas, New York, NY. Other domestic and foreign offices have been or are in the process of being closed. The firm will work with its landlords to help lessors of telecommunications, computer equipment, and furniture to recover and remove their property in a timely manner.

Dewey & LeBoeuf has retained Joff Mitchell of Zolfo Cooper as chief restructuring officer and Albert Togut of Togut Segal & Segal as bankruptcy counsel.

The London and Paris offices of Dewey & LeBoeuf are operated through a separately incorporated UK entity, which was placed into administration on Monday, May 28. Administration is a UK legal process under court supervision, broadly similar to Chapter 11. The UK partnership is following broadly the same approach as that of Dewey & LeBoeuf in the U.S. Mark Shaw and Shay Bannon, business restructuring partners of BDO, were appointed joint administrators of the UK entity.

To read the WSJ article in its entirety, click here.