There may be—as the defunct law firm’s lead bankruptcy lawyer, Albert Togut, said at a hearing last week—”no future in working for Dewey & LeBoeuf,” but there will be bonuses for the handful of employees who stick around a little while longer to help wrap up its operations.
Overruling objections raised by the U.S. Trustee’s Office, Manhattan bankruptcy court Judge Martin Glenn issued an order Monday in which he mostly approved the Dewey estate’s plan to reward the firm’s remaining 48 employees with a total of up to $700,000 in bonuses if they continue to assist in the wind-down effort. The one element of the plan Glenn balked at involved a proposal to allocate up to $100,000 for a “discretionary fund” to be used to pay collection and operational staff.
More than one-third of the bonus pool, up to $250,000, will be set aside from funds currently earmarked for collections agent On-Site Associates and earmarked for contingency-based bonuses for three Dewey employees working on collecting what the firm’s advisers have described as more than $200 million in unpaid bills. As The Am Law Daily reported last week, the balance of the money to be used for the bonus payments would come from the Dewey estate’s budget.
Glenn hesitated at giving the bonus plan his blessing when it was put before him last Wednesday, asking instead that the firm submit more information on the size of the bonuses that specific employees would receive and how the $100,000 “discretionary fund” would be used. Dewey’s chief restructuring officer, Joff Mitchell, submitted further details about the plan to the court Thursday, including the proposal to give up to $110,000 apiece in incentives for two senior collections department employees, and another $30,000 maximum incentive payment for an analyst in that department.
The additional details helped sway Glenn, who wrote in his order that the cost of the bonus plan is reasonable because the size of the payments would be proportional to the amount in unpaid bills the employees in question can collect. “One of the debtor’s principal assets in this case is its receivables, and this case hinges upon the debtor’s ability to maximize collection of its receivables,” Glenn wrote. He added, however, that Mitchell’s supplementary filing did not sufficiently outline how the $100,000 “discretionary fund” would be allocated, leaving open the possibility that that portion of Dewey’s plan could “discriminate unfairly.”
In a separate development, Dewey’s lawyers filed a notice late Monday stating that a hearing originally set for Tuesday to consider the estate’s request to consider using its cash collateral past July 31 had been canceled. Dewey’s advisers are seeking the court’s permission to continue funding operations until August 15 while former firm partners consider whether to sign on to a revised settlement proposal under which they would make payments to the estate in exchange for a waiver from any Dewey-related liability. While Glenn had not granted that extension as of late Monday, other filings submitted by Dewey’s lawyers suggest they are close to reaching an agreement with the firm’s secured creditors that would allow the estate to operate for another two weeks.
The Am Law Daily reported Friday on a massive financial statement filed by Dewey that offers fresh details about the various payments the firm made to a variety of parties—including a host of bankruptcy and restructuring advisers—during its march to Chapter 11. The financial affairs statement also contains a list of six law firms that signed confidentiality agreements and reviewed Dewey’s audited financial reports ahead of the bankruptcy filing as the failing firm sought a merger partner.