Correction, 3:45 p.m. EDT: An earlier version of this story incorrectly identified the name of a former LeBoeuf, Lamb, Greene & MacRae partner who spoke at Tuesday’s hearing. His name is John Campo. We regret the error.
“I can finally confirm the worst-kept secret of the year,” bankruptcy lawyer Albert Togut said late Tuesday afternoon in a lower Manhattan federal courtroom. “I am counsel for Dewey & LeBoeuf.”
So began the initial hearing in Dewey’s Chapter 11 casean event that came less than 24 hours after the law firm became the largest ever in the history of the United States to seek bankruptcy protection. The two-hour, standing-room-only session ended with U.S. Bankruptcy Court Judge Martin Glenn declining to approve a motion that would have allowed the Dewey estate to use cash collateral held by its primary lender, JPMorgan Chase, to fund the work of those responsible for winding down the firm’s remaining operations.
The hearing also offered a glimpse of what lies ahead in the proceedings, including Togut’s assertion that Dewey hopes to reach a settlement with former partners over what he obliquely called “contributions” those partners should return to the bankrupt firm’s estate.
Dewey’s request to use its cash collateralthe only motion of the nine Glenn considered Tuesday and did not approveconsumed much of the hearing. At issue: whether JPMorgan, as collateral agent to secured creditors owed some $225 million by the firm, could file a lien on recoveries from avoidance actions, which are claims that arise during the bankruptcy process that are typically reserved for the benefit of creditors.
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