With a liquidation trustee now overseeing Dewey & LeBoeuf’s bankruptcy, the professional advisers who guided the defunct firm through its first nine months of Chapter 11 proceedings want to be paid the balance of the $23.6 million they say they have earned for their contributions to the case.
The advisers—10 law, financial, and restructuring firms—submitted final fee requests in U.S. bankruptcy court in Manhattan this week that detail hours worked and expenses incurred from the time Dewey filed for bankruptcy in May 2012 through March 22 of this year, when the firm’s Chapter 11 plan became effective.
As happened during the bankruptcy’s initial billing phase—a period that encompassed work done through the end of October—Dewey’s primary bankruptcy counsel, Togut, Segal & Segal, submitted the biggest bills. The New York bankruptcy boutique’s $8.91 million fee request includes an account of how the firm and lead partner Albert Togut, in its view, "played a critical role in formulating the Debtor’s wholly different approach to a plan."
That approach included a settlement that raised a total of more than $70 million from former firm partners who agreed to repay the Dewey estate part of their earnings from 2011 and 2012, as well as separate settlements with retired partners and with firms that hired Dewey partners. The firm’s work also entailed addressing more than 1,300 claims filed as part the bankruptcy by creditors seeking to recover hundreds of millions of dollars in alleged Dewey debts. Court filings show that secured creditors are expected to be paid roughly 47 to 77 cents for each $1 they are owed, while unsecured creditors are likely to receive between 5 and 14 cents per $1 in debt.
At $6 million, Zolfo Cooper, the professional home of Dewey’s chief restructuring officer, Joff Mitchell, is the Dewey estate’s second-highest-billing adviser. Unlike the other advisers working on the case, according to Mitchell, the terms of the agreement under which Zolfo was retained allowed the firm to submit bills and be paid monthly.
Brown Rudnick logged $3.54 million in fees and expenses through March 22 for its work advising the official committee of unsecured creditors in the bankruptcy. That amount covers 5,032 hours of work by lawyers and paraprofessionals at a blended hourly rate for attorneys of about $670, according to a fee request filed Monday. (The firm is now advising the liquidation trustee overseeing the case, Alan Jacobs.)
Deloitte Financial Advisory Services, which also advised the unsecured creditors’ committee, sought $1.25 million in a Monday filing of its own.
Kasowitz Benson Torres & Friedman seeks $1.35 million—the maximum amount allowed under a settlement reached in February between Kasowitz’s clients, an ad hoc committee of retired Dewey partners, and the Dewey estate. The fee is nearly $700,000 less than what the firm actually billed in the case, Kasowitz notes in its request, adding that it "made this concession in order to achieve its clients’ objective while protecting the Debtor’s estate from significant litigation and risk."
The other firms filing fee requests this week include: Goldin Associates, which provided financial analysis to help construct the former partner settlement ($1.3 million); special benefits counsel Keightley & Ashner ($169,366); bankruptcy administrator Epiq Bankruptcy Solutions ($129,152); tax counsel Ernst & Young ($257,161); and German wind-down counsel Thierhoff Muller & Partner ($700,234).
Objections to the applications are due May 30, and a hearing before U.S. Bankruptcy Judge Martin Glenn is scheduled for June 20. Many of the fees being requested have already been paid with Glenn’s approval.
Earlier this year, Glenn scolded several advisers working on the case for seeking reimbursement for items such as taxi rides, pricey hotel stays, and vague time entries included in fee requests. "Take the subway. Take the bus. Better yet, have your firm pick up that cost," Glenn demanded in court January 24 in response to the taxi ride line items.
In an apparent attempt to address the problem, Togut’s request attests that "mass transit has been used whenever practicable" and that none of the travel-related expenses were for "first-class airfare, luxury accommodations, or deluxe meals."