After an early summer slowdown, the Dewey & LeBoeuf bankruptcy docket is beginning to hum again, with the defunct firm's liquidation trustee filing a slew of suits Friday seeking the return of $5.7 million paid to Bank of America, several law firms and various other vendors in the 90 days before Dewey sought Chapter 11 protection.
The dozen so-called preference actions—which aim to ensure that Dewey didn't give favorable treatment to certain vendors just before going under—represent just the first wave of such litigation, says Minnesota lawyer Joseph Steinfeld, whose firm, ASK LLP, filed the Friday suits on behalf of Dewey liquidation trustee Alan Jacobs.
Steinfeld says that his firm is handling 25 preference cases that Jacobs' counsel at New York firm Hahn & Hessen couldn't bring because of conflicts, and that the ultimate number of cases to be filed will be much higher. Some similar claims are being resolved outside of court, he says (Jacobs could not be reached for comment Friday).
The nearly identical, 11-page suits detail why each defendant must return the money, saying that the payments were made while Dewey was already insolvent. Whatever money is collected will ultimately go into the pool being paid out to creditors, Steinfeld says, meaning some of those being sued in such actions could see at least some of what's recovered from them returned.
Early estimates pegged recoveries for unsecured Dewey creditors at between 5 cents and 14 cents per dollar of debt. Secured creditors are expected to get between 47 cents and 77 cents on the dollar, Dewey's advisers have said.
Those sued Friday include Shook, Hardy & Bacon, which the filing says received $268,707 in March 2012. As The Am Law Daily has previously reported, Shook represented Dewey in a $3 billion malpractice suit in Missouri stemming from an alleged conflict in an insurance deal. Shook Hardy is still seeking $1.5 million from Dewey through the bankruptcy claims process. Shook chairman John Murphy declined to comment when contacted Friday.
Cook Vetter Doerhoff & Landwehr, which also advised Dewey on the Missouri suit, was sued for $297,016.
Other law firms targeted include: Allen & Overy (which was paid $30,523), a firm that previous flings show advised Dewey on debt counseling or bankruptcy matters; private client boutique Cummings & Lockwood ($22,665); Gaims, Weil, West & Epstein ($496,426); Lankler Siffert & Wohl ($79,686), which Dewey hired in connection with a criminal probe launched by the Manhattan district attorney's office; and pension and benefits counsel Keightley & Ashner ($200,000). Lankler counsel Joanne Harvey said via email Sunday the complaint against the firm "was filed in error and is being withdrawn." Representatives for the other firms sued Friday either declined to comment or could not immediately be reached for comment.
New York plaintiffs-side employment firm Vladeck, Waldman, Elias & Engelhard also made the list, with a $20,113 claim. Reached Friday, partner Anne Vladeck said the firm received the money in connection with its work on behalf of a client who had an employment dispute with Dewey and was owed attorney's fees.
The suit against Bank of America, one of a handful of banks that loaned money to Dewey, seeks the largest sum largest: $3.9 million. A BofA spokeswoman declined to comment.
Others sued include Geoffrey Hazard, a legal ethics professor at University of Pennyslvania Law School, who filings say was paid $20,000 by Dewey for invoices dating back to August 2011 (He did not immediately respond to a request for comment Friday).
Elsewhere in the Dewey bankruptcy, the 115 former partners who chose not to sign on to the $70 million partner contribution plan—a pivotal piece of the Dewey Chapter 11 plan approved in February—are now being called on to account for their alleged debts related to the firm.
Texas lawyer Allan Diamond, whose firm was hired by the Dewey team in May to handle a number of potential recoveries in the bankruptcy, said Friday that he has started sending demand letters to some members of that group. Diamond said he couldn't detail how much money he is seeking and added that many of the former partners in question haven't yet been approached because he and his firm are still calculating what they allegedly owe. Ultimately, he said, it is sure to be more than what they would have paid under the partner contribution plan.
"I don't believe Jacobs will settle with anyone for amounts anywhere near as low as the PCP," Diamond says. "If anyone thought that (would be the case), they should have rethought that."