Confusion over how much legal protection former Dewey & LeBoeuf partners are getting under a settlement with the defunct firm’s estate may slow what Dewey advisers hoped would be the swift confirmation of the Chapter 11 plan they have drawn up for repaying creditors who say they are owed some $600 million.

A handful of dissenters raised objections to that plan at a Thursday hearing during which U.S. Bankruptcy Judge Martin Glenn asked his own questions about the document and an accompanying disclosure statement. Together, the two filings—which were submitted to the court in November—are intended to serve as a roadmap for how the Dewey estate plans to allocate funds to secured and unsecured creditors and other constituents.

Glenn urged Dewey’s bankruptcy counsel from Togut, Segal & Segal to describe exactly who can still sue whom if the so-called partner contribution plan reached last year with some 400 partners is approved as part of the larger Chapter 11 plan.

“There is a fundamental problem, okay?” Glenn said, citing various snippets of legalese that he believed required clarification to ensure, for instance, that one Dewey partner could still sue another for a completely non-Dewey related grievance such as a personal injury claim, even if they signed on to the partner contribution plan. “When objectors say we don’t know what’s being released and what’s not being released, I agree.”
Edward Weisfelner, a Brown Rudnick partner advising a committee of Dewey’s unsecured creditors, also warned during Thursday’s hearing that some former partners have threatened to withdraw their commitments to the settlement because of what they say was inadequate disclosure that outside entities might still be able to sue partners who commit to the deal.

According to Dewey filings, former partners have agreed to return roughly $71 million that they received from the once-vibrant firm in 2011 and 2012, though Glenn pressed Dewey’s lawyers Thursday to give him an exact figure that takes into account a number of incentive discounts offered, including one for those who help collect unpaid bills.

Weisfelner said the former partners reconsidering their pledges to the settlement had begun to waver once they learned that the owner of Dewey’s former headquarters office at 1301 Avenue of the Americas in Manhattan planned to pursue claims against them on the grounds that former partners are personally liable for the firm’s lease. While the Dewey estate has strongly contested the landlord’s position, the issue has nonetheless clouded the partner contribution plan’s potential success.

Later in the hearing, Brian Masumoto, an attorney with the U.S. trustee’s office, expressed concerns that administrative expenses estimated at $54 million, which get paid out before unsecured creditors see anything, could leave those creditors penniless.

“Is it possible the amount allocated to unsecured creditors could be zero?” Masumoto asked. “In fact that’s my understanding.” (Weisfelner countered that they have no intention of that being the case.)

Glenn also homed in on potentially problematic sections of the disclosure statement, becoming the most visibly angry when discussing a clause related to how the Dewey estate plans to get rid of former client files. As currently written, the filing says the estate hopes to avoid paying the estimated $1.2 million to $1.5 million cost of destroying files that go unclaimed.

Glenn reminded the lawyers that he told them at a July 9 hearing that they couldn’t just shirk their responsibility to preserve the confidentiality of such documents as a way to cut costs, and that he had ordered them to obtain an ethics opinion about how to proceed. That opinion never surfaced, he said: “I will not approve a plan that transfers client files to a trust. Your firm has ignored what I told them on July 9. And I’m not happy about it.”

The hour-and-a-half hearing ended with Glenn ordering the attorneys to meet Friday to make the changes to the plan that had been discussed, the most important of which involves sorting out the releases to be given to former partners as part of the plan. Once Glenn is satisfied, the disclosure statement and plan will go to the firm’s creditors for their vote. If confirmed, a liquidation trustee will then take over the bankruptcy and pursue remaining claims. A recent filing shows New York–based financial consultant Alan Jacobs has been tapped to serve as the Dewey trustee. (Reached by email Thursday, Jacobs said it was premature to comment.)

Weisfelner seemed uneager to see many changes made to the plan, saying the legal fees amassed by the estate are already high enough and that further revisions will only add to that tab. As The Am Law Daily reported this week, Dewey’s advisers have so far requested $14.8 million in bills.

“Just so your honor knows, with my billing rate I can’t be involved in language disputes,” Weisfelner said to a suggestion that the lawyers stick around after the hearing to go over the judge’s to-do list. (Court filings show Weisfelner charges $1,000 per hour.)

Glenn is scheduled to see the lawyers again on Monday at 9 a.m.

In other Dewey developments, litigation initiated by former Dewey partner Henry Bunsow in June against several former Dewey managers in which Bunsow claims he was fraudulently induced into joining the firm appears to be nearing a resolution. A recent filing shows that the outlines of a settlement have been reached that would see Bunsow and three other former Dewey lawyers who now work with him at a San Francisco boutique contribute $435,169 to the partner contribution plan and agree to assign their claims to the Dewey estate.

In his complaint, Bunsow likened Dewey to a Ponzi scheme, saying the firm lured in new partners by misrepresenting the firm’s finances. Bunsow and an attorney representing him in the case did not immediately return requests for comment Thursday.

Overseas, meanwhile, members of Dewey’s former Italian office have already moved on from their initial post-Dewey home. In late May, Dewey’s former Italian practice leader Bruno Gattai joined up with other former Dewey lawyers as well as Italian lawyer Vittorio Grimaldi to form Grimaldi Studio Legale. Gattai branched off from that firm last month, creating a new Milan-based firm, Gattai, Minoli & Partners, with 11 other partners, two counsel, a number of associates.

The new outfit is already busy; the firm worked alongside Kirkland & Ellis to represent Bain Capital and Italian private equity firm Clessidra SGR in a deal to sell Cerved Group to CVC Capital Partners for $1.49 billion.