It was decided on Thursday that former partners of Dewey and LeBoeuf, the defunct law agency had to shell out at least $50 million toward a settlement contract. The advisers associated with the firm had been seeking this minimum amount so that they would be in a position to put forward the proposition to bankruptcy court.
If the settlement happens to get approved, it could lead to the first large scale recovery for the creditors of Dewey who, as per court records, need to be repaid by at least $315 million.
An e-mail which was forwarded to ex-Dewey partners indicates that according to the terms of the final settlement deal, former partners of the Dewey law firm had to come up with a minimum amount of $50 million, latest by 5 p.m. dated the 16th of August. The condition was successfully fulfilled on Thursday by 2:45 p.m. However, the e-mail did not contain any information regarding the amount of money that was donated altogether.
Unacceptable Conditions of Agreement
An individual, who is closely involved with the issue, claimed that almost 300 partners out of a total number of probably 672 candidates put their signature on the agreement.
The factions to the bankruptcy have been getting themselves into tangles over the course of a couple of months regarding the conditions of the agreement. Joff Mitchell, the restructuring administrator, has been handed the responsibility of offering guidance to the estate which has been attempting to coerce ex-partners to return a share of their compensation in order to settle up the accounts of creditors like bondholders and banks. But a number of past partners have maintained that the specifications provided by the estate were unreasonable. Several lesser earning partners claimed that they were being forced to return more than their fair share, while persons earning much more or in charge of management were not asked to return as much as they should have.
Action against High Earners
The deal does not in any way indicate that negotiations will reach their conclusion. A board made up of ex-partners of Dewey approached a federal bankruptcy judge on Thursday and asked him to assign an independent examiner to look into the agreement before it gets the approval of the court. David Freidman, a representative lawyer of the committee, stated in court records that if such an inquiry was not carried out there would be no effective means of determining whether the debtor or anyone else, even the court, could cook up an informed outlook regarding the reasonableness of the terms of the settlement. Through the medium of court records, Freidman challenged the organization of the team charged with the Dewey recovery. He asserted that the team was being handled by legal representatives who had provided advice to the firm before it collapsed and that they presented greater earners at Dewey with additional privileges when planning the settlement.
Partners who were not ready to go through with the transaction tended to remain susceptible to claw-back lawsuits unless they acknowledged the contract after the August 16th cut-off date and consented to pay a 25 percent penalty.