A group of office equipment lessors are opposing Dewey & LeBoeuf‘s proposed use of cash collateral to fund its Chapter 11 bankruptcy, arguing that the approval of such an arrangement unfairly favors secured creditors and leaves unsecured creditors with little recourse if their bills are not paid.
The objectionswhich also include a claim that the Dewey estate has already sold some of the property owned by the lessorssuggest that things could get contentious at a hearing scheduled for next Wednesday at which Manhattan bankruptcy judge Martin Glenn will consider Dewey’s final motion requesting the use of its cash collateral. The bankrupt firm’s estate has proposed a budget of $8.6 million to fund the first three weeks of its wind-down. The money would come from cash used as collateral to offset money owed to JPMorgan Chase and a group of hedge funds.
Unsecured creditors argue that the cash belongs to more than just those parties, and that using it will leave others that have asserted claims in the bankruptcy unprotected.
One of the lessors raising objections, Fidelity National Capital (which does business as Winthrop Capital), said in its motion filed Wednesday that it has had a contract with Dewey dating back to 2003, when it was still LeBoeuf, Lamb, Greene & MacRae.
