As the fallout from the demise of Dewey & LeBoeuf continues, liquidators of the UK arm are assessing paying an interim dividend to unsecured creditors of the City office having finished disbursements to secured and preferential creditors.
A progress report on the Dewey wind-down filed by liquidators BDO at the beginning of this month showed that under the partner contribution plan (PCP), almost £572,000 has been received from the UK arm’s former partners as payment for the unsecured creditors, while approximately £28.5m worth of unsecured claims have been made against the UK LLP. The US partnership is making £23.7m worth of those claims.
The PCP was formally authorised as part of the restructuring plan by the US Bankruptcy Court in February 2013. The news comes after three top executives and a client relations manager at the now defunct firm were charged with fraud in March this year, when former chairman Steven Davis, former executive director Stephen DiCarmine, former chief financial officer Joel Sanders and client relations manager Zachary Warren were alleged to have ‘defrauded and stolen’ from the firm’s lenders, investors and others.
BDO confirmed it is investigating whether there are grounds to pursue any similar claims against former partners of the UK arm who did not participate in the PCP.
So far, secured creditors have received £2.3m in distributions, comprising £1.5m which was paid out during the administration, with a further £800,000 distributed during liquidation.
The news coincides with another defunct firm, Cobbetts, whose final pay-out to major creditor Lloyds TSB has been blocked. The bank was owed £7.3m in total, following the firm’s demise in early 2013, of which around £2.3m was secured. However, the final pay-out has been blocked as four former Cobbetts partners are seeking potential legal action against the UK LLP claiming that money was owed to them in relation to capital and tax reserve accounts that should have been held on trust.
The administrator KPMG’s report shows that a final distribution of £336,687 to Lloyds TSB has been postponed while liquidators investigate further. Pinsent Masons is representing Cobbetts during the administration.