Dewey & LeBoeuf Files for Bankruptcy

Posted on May 31, 2012 at 6:05 PM

On Monday May 24th, 2012, Dewey & LeBoeuf filed for Chapter 11 bankruptcy, listing debt of $245 million and assets of $193 million in the U.S. Bankruptcy Court in Manhattan. Togut Segal & Segal’s, Managing Partner Albert Togut represented Dewey & LeBoeuf as bankruptcy counsel. Joff Mitchell from Zolfo Cooper acted as chief restructuring officers.

About 90 employees from Dewey are expected to stay on with the firm to help with the liquidation that should be completed in a few months. Dewey & Lebeouf’s UK LLP, which includes the firm’s London and Paris offices and their subsidiary Dewy & LeBoeuf Services Ltd, were placed into administration on May 28th, 2012. Mark Shaw and Shay Bannon, partners at BDO, were appointed as joint administrators. Dewey & LeBoeuf offices in Hong Kong, Beijing, Sao Paulo, London, Paris, Madrid, Frankfurt and Johannesburg will be closing shortly. All of the firms US offices are closed or are in the process of closing.

Being formed during negative economic conditions, along with rapid growth and partnership compensation arrangements, Dewey was in a situation where there was insufficient cash flow to cover capital expenses and compensation expectations. Even as Dewey’s performance declined, they still gave out extravagant multiyear, multimillion-dollar guarantees to their top partners and recruits creating compensation obligations that the firm could not meet.

Dewey partners are expected to collectively lose tens of millions of dollars that they had tied up in the firm. They could also face “clawback” suits from creditors seeking to recover money from the firm. A majority of Dewey’s partners, roughly three quarters, have found jobs at other firms and 36 of them have joined DLA Piper.

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