In a somewhat unusual move, the U.S. trustee’s office appointed not one, but two committees to help advise unsecured creditors on Dewey & LeBoeuf‘s Chapter 11 bankruptcy.
The first, an official unsecured creditors’ committee, is composed of three vendors that provided a mix of services to Dewey & LeBoeuf: staffing agency HireCounsel, car service Inta Boro Acres Inc., and equipment lessor Winthrop Capital.
The second group, dubbed the official committee of former partners, is made up of David Bicks, Cameron MacRae, John Kinzey, and John Campo.
None of the seven committee members could immediately be reached for comment late Thursday. Two lawyers from the U.S. trustee’s office working on the Dewey case, Brian Masumoto and Tracy Hope Davis, did not immediately return calls seeking comment on why two committees rather than one had been formed.
According to court filings, HireCounsel is owed $1.6 million and is Dewey’s fifth largest unsecured creditor. The company’s contact is listed as Lynn Mestel, a New York legal recruiter who helped put together the merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae in 2007.
Inta Boro executives were on hand at the Wednesday meeting held to help form the unsecured creditors’ committee. Inta Boro vice president Kubilay Durantas told The Am Law Daily at the time that Dewey owes his company more than $200,000—an amount that keeps them off the list of the firm’s 20 largest unsecured creditors, which cuts off at $362,000.
Minnetonka, Minnesota–based Winthrop is listed in court filings as a secured creditor owed $35.5 million. The company was represented at Wednesday’s meeting by Kelley Drye & Warren partner Robert LeHane, who could not be reached late Thursday.
All four of the former partners tapped by the U.S. trustee’s office have ties to legacy firm LeBoeuf Lamb. MacRae, who joined Dewey & LeBoeuf in the merger and moved to Duane Morris earlier this month along with Bicks, is the son of LeBoeuf Lamb name partner Cameron MacRae Jr. (MacRae is now a corporate partner at Duane Morris and Bicks, a securities lawyer, is of counsel.)
Campo and Kinzey, both bankruptcy specialists, left LeBoeuf before the merger and landed at Dreier LLP, the now-defunct law firm of Marc Dreier, imprisoned in 2009 after being convicted of carrying out an investment fraud scheme that destroyed his firm. Both now work at Troutman Sanders, Campo as a partner and Kinzey as senior counsel (court papers list Kinzey as having a Nashville address). Campo, who worked as a senior attorney in the U.S. trustee’s office before joining LeBoeuf Lamb, has already been active in the proceedings. At the initial hearing in bankruptcy court Tuesday, Campo identified himself and Kinzey as creditors because of “separation agreements” with LeBoeuf Lamb that have left them owed “significant monies.”
Missing from the committee representing the interests of former partners: anyone whose ties are to the legacy Dewey firm. Other notable parties without direct representation on the two committees include former Dewey & LeBoeuf employees, some of whom have already sued the firm for allegedly violating the federal Worker Adjustment Retraining Notification Act, and the Pension Benefit Guaranty Corporation, which is listed as Dewey’s largest unsecured creditor and which has sued the firm in an effort to safeguard what it says are pension plans that are underfunded in the amount of $80 million.
The next step for the committees will be to appoint legal and financial advisers. Several law firms—including Edwards Wildman Palmer, Brown Rudnick, McCarter & English, and New York bankruptcy and litigation boutique DiConza Traurig Magaliff—had lawyers present at Wednesday’s meeting to try to land the work. Financial advisers were also on hand, including Avalon Group.
Dewey and its advisers have wasted no time in moving the process along since seeking Chapter 11 protection late Monday in the largest U.S. law firm failure in U.S. history. Manhattan Bankruptcy Judge Martin Glenn has already approved a bevy of motions, including one allowing Dewey to access cash collateral held by primary lender J.P. Morgan Chase to fund the day-to-day business involved in winding down the firm’s operations. The bank and the firm have agreed to an $8.6 million budget for the next 21 days, according to court filings.
Dewey’s lead bankruptcy counsel, Albert Togut of New York bankruptcy boutique Togut, Segal & Segal, has publicly insisted that this law firm dissolution will be different than others that have come before it, including Finley Kumble’s famous 1987 flameout (a case on which Togut also worked). As Togut told Glenn during his opening remarks Tuesday: “We are ready to work to maximize recoveries and not have this case deteriorate into the chaos this court is accustomed to seeing in a law firm bankruptcy.”