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Martin Glenn, a federal judge, approved a $71.5 million settlement between 400 former Dewey & LeBoeuf LLP partners and the estate for the firm on Tuesday. The settlement approval is the largest recovery as of yet for the creditors of the firm. The creditors are owed anywhere from $315 million and $560 million, according to the Wall Street Journal.
Judge Glenn wrote the following in his Tuesday decision:
“From early on in this case, it has been clear that the Ad Hoc Committee intended to do whatever it could to scuttle any proposed PCP. The Examiner Motion has been the main tactical choice of the Ad Hoc Committee to try to derail the PCPs…
The Court concludes that the Examiner Motion was filed for an improper purpose as a litigation tactic to try to derail approval of the PCPs. The applicable facts and law that lead the Court to approve the PCPs, as explained below, establish that the Debtor and its professionals conducted an appropriate inquiry and analysis of the facts and circumstances of this case to support moving forward now with the PCPs.”
Annette Jarvis, a lawyer for an ad hoc committee that consists of retired partners from the firm, released a statement in an email that reads:
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“The Ad Hoc Committee, representing 50 LeBoeuf retirees (and their widows) with claims of over $64 million, is very disappointed with the court’s rejection of the motion for appointment of an examiner. The sordid facts underlying the Dewey & LeBoeuf demise cry out for investigation by an independent examiner. The Court’s attribution of improper motives to the retirees who brought the motion adds insult to injury. The Ad Hoc Committee will be examining the decision with a view to appeal.”
According to court documents, some partners have agreed to pay over $1 million apiece and others have said they would pay the minimum. The price ranges from $5,000 to $3.5 million per partner of previous earnings. Over half of the partners will owe less than $100,000.
Former firm chairman, Steven Davis, will be sued by the estate for Dewey along with former executive director Stephen DiCarmine and former chief financial officer Joel Sanders. The estate is planning to sue over their reported role in the collapse of the firm. The judge’s decision went on to say the following:
“The PCPs would avoid the costs of expensive and time-consuming litigation, conserve the Debtor’s resources to pursue claims against those most likely to have mismanaged the firm, and minimize the risk of expending the Debtor’s liability insurance policy on unnecessary defense costs.”
