Giving a group of retired Dewey & LeBoeuf partners an official role in the defunct firm’s Chapter 11 bankruptcy was a “misstep” that needs to be corrected, according to attorneys representing the Dewey estate.
In a court filing made Wednesday, lead Dewey bankruptcy lawyer Albert Togut lists five specific reasons why the four-member official committee of former partners appointed by the U.S. trustee’s office in late May should be disbanded. Togut says the group’s interests can still be represented via an official unsecured creditors committee working on behalf of all such creditors in the bankruptcy, as well as by a 50-member ad hoc group of retirees from legacy firm LeBoeuf, Lamb, Greene & MacRae that formed to protect benefits owed under a pension plan tied to that firm.
Both the official former partner committee and the ad hoc group opposed the recently approved $71.5 million settlement plan with former partners that offered partners the chance to give back a percentage of money they earned from Dewey in 2011 and 2012 in exchange for a waiver of Dewey-related liability. The two groups have argued that the plan was created to favor recently departed partners and that retirees have been strong-armed into participating in it though they receive little for doing so.
Togut argues that the official committee, which is represented by Kasowitz Benson Torres & Friedman, “has not contributed in a productive way to this bankruptcy case.” Instead, he asserts, the group “has consistently taken positions that are detrimental to the orderly administration of this case and contrary to the efforts of the Debtor’s bona fide stakeholders (i.e., the Secured Lenders and general unsecured creditors).”
Togut also argues that the $779,000 Kasowitz has billed for its work on the case between its appointment June 4 and the end of August is double the amount that has been budgeted for the committee’s legal fees—and a major drain on the estate’s resources. By raising opposition to the settlement plan with former partners, Togut adds, “the Debtor (along with its professionals) was forced to collect more than 70,000 pages of documents from multiple sources and to process and produce more than 22,000 pages on an expedited schedule,” as well as spend two days making people available for depositions.
“Enough is enough,” he writes.
Cameron MacRae III, a Duane Morris partner who sits on the official committee, said Thursday that he stands by the U.S. trustee’s appointment of the group as an appropriate vehicle for retirees, “who have suffered the most,” to have a voice in the proceedings.
“Just because the debtor doesn’t like the positions the former partners committee takes, it does not mean that they should be allowed to silence the committee,” MacRae says. “That’s not how our judicial system should work.”
MacRae, the son of legacy LeBoeuf Lamb name partner Cameron MacRae Jr., retired in 2004 but continued to work for LeBoeuf Lamb—and Dewey & LeBoeuf once the firm merged with Dewey Ballantine in 2007—on an of counsel basis until just before the firm’s late May collapse.
Joining MacRae on both the official committee and the ad hoc group is David Bicks, who continued to do legal work for LeBoeuf Lamb and Dewey after retiring at the end of 2001 and moved to Duane Morris as of counsel earlier this year. Both MacRae, 70, and Bicks, 79, expressed shock and anger Thursday at a portion of Dewey’s filing that aims to discredit their motivations in the bankruptcy by saying the two had “extraordinary arrangements with the Firm” that allowed them “to receive retirement payments from the Firm, even though they were actively engaged in the practice of law (which was prohibited under the relevant retirement plans).” (The filing later cites the retirement plan as specifying that continuing to practice is not allowed when it is “in competition” with the firm’s practice.)
By continuing to work for LeBouf Lamb, and later Dewey & LeBoeuf, Bicks and MacRae contend that they were in full compliance with the pension plan and that the motion contains a “serious misstatement of facts.”
The committee also includes two legacy Dewey Ballantine partners—Stuart Hirshfield, now senior counsel at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, and E. Ann Gill, now an attorney with real estate management company Balmer Parc—who came on board this summer. Both signed on to the partner contribution plan; Hirshfield agreed to contribute $5,000 and Gill $5,085. Hirshfield says he believes the committee should continue to exist but had no further comment. Gill could not be reached for comment Thursday.
When formed in late May, the official former partners committee also included two other legacy LeBoeuf Lamb partners, John Campo and John Kinzey, both of whom moved to Troutman Sanders in 2010. The pair, who continued to receive retirement benefits from LeBoeuf, filed a letter with the court October 5 resigning from the committee “so we will be free to advocate our own views individually as the case moves forward.” (Neither returned calls for comment Thursday.)
Edward Weisfelner, a partner at Brown Rudnick who represents the three-member official unsecured creditors committee, says he and his clients support the disbanding of the former partner group. “Our view is that there was no justification for their appointment in the first place,” he says.
The official committee’s lawyers at Kasowitz did not return calls for comment Thursday, but Bicks and MacRae made it clear they plan to fight to move to dissolve the group (Kasowitz also filed a one-paragraph notice of appeal late Thursday indicating that the official committee plans to challenge the partner settlement.)
“This is nothing more than their cynical effort to try to scare people into submission,” says Bicks. Adds MacRae: “The retirees are like the lone voice in the wilderness.”
A hearing on the request to dismantle the group is scheduled for November 1 at 2 p.m. before U.S. Bankruptcy Judge Martin Glenn.