The defunct law firm Sedgwick asked a federal bankruptcy judge to approve a clawback settlement with 45 former equity partners who agreed to return $1.6 million paid during the firm's collapse.

A 27-page filing by the firm's bankruptcy counsel indicated some partners not covered by the settlement might still be vulnerable to breach of fiduciary duty claims.

Still, the firm said the settlement will expedite the resolution of Chapter 11 proceedings in the Northern District of California, which began in October 2018.

“The debtor believes that further negotiation or active litigation against the settling partners will not increase the cash available for distributions to creditors but will only dissipate cash that could otherwise be used to pay the allowed claims of unsecured creditors,” said Sedgwick bankruptcy counsel John Lucas of Pachulski Stang Ziehl & Jones.

The Am Law 200 firm's Miami office had five attorneys just before it shut down in January 2018, down from about 10 a year before. Kimberly Cook, the office's former managing partner, is with Goldberg Segalla in Miami. Her husband, former Sedgwick law partner and former Florida Bar president Ramon Abadin now practices at Ramon A. Abadin P.A. in Coral Gables.

The court filing outlined the San Francisco-based firm's rocky final year, detailing its unsuccessful efforts to find merger partners after losing two revenue-generating offices.

The filing stated the firm has liabilities of $10 million to $50 million, mostly unpaid lease obligations. About $9 million is accounts payable. In 2018, Sedgwick was sued by multiple landlords claiming it failed to pay lease termination fees.

Thursday's filing noted the firm did not collapse through unsustainable guarantees to partners.

“It is important to note that the debtor was not a Dewey, Heller or Brobeck,” court papers said, referring to other defunct firms. “The firm's former equity partners were not operating under contractual guarantees that required the firm to pay partners fixed compensation without regard to such partners' actual book of business and receivables generated,” it said.

“Nor was the debtor inflating income or profits to ensure that partners would not leave or artificially enhance the firm's ratings,” the filing continued.

It also acknowledged the sacrifices of the partners who stuck around. ”Nearly all of the setting partners remained at the firm throughout 2017, continued to bring in clients, collect receivables and were paid a small fraction of what they were paid in prior years or what they could have been paid at [others] had they left the firm,” the filing said.

The bankruptcy filing by Sedgwick came after former partners on the firm's dissolution committee hit a roadblock in discussions with a group of 12 of the busted firm's largest creditors.

Creditors followed the firm's filing with a motion Thursday indicating they would dispute the settlement. The creditors asked to convert a hearing set Thursday into a scheduling conference for the pending fight.

But the judge in the case said scheduling and other details would be handled at a hearing now set for July 1.