Dewey & LeBoeuf was one of New York’s largest law firms and it had offices worldwide. However, it filed for bankruptcy last year in the spring and when it did so “it became the largest U.S. law firm to file for bankruptcy” as reported by Thomson Reuters News and Insight in a May 31, 2013 article. The firm was forced for file for bankruptcy because the firm made false salary promises to some of its partners.
A New York bankruptcy court recently approved a settlement agreement between the insurer of the law firm and the former chairman of the law firm where they will have to pay close to twenty million dollars to settle the financial obligations of the firm. Furthermore, this settlement agreement will end the financial problems of the firm and the firm will not be responsible for future law suits.
Moreover, the former chairman of the firm claimed that he did not engage in any wrong doing and that he complied with his fiduciary duties and did what was best for the law firm. Fiduciary duty is when there exists a special relationship between two parties. The relationship is based on trust and confidence and one party [the fiduciary] has the authority to act on behalf of the other party. Any decision taken by the fiduciary must be done in the best interest of the other party. Some of the fiduciary contexts include but is not limited to principal/ agent, and trustee/beneficiary. If someone owes fiduciary duties to another and he does not comply with them, then he can be liable for any errors or problems that occur.
Next, when a bankruptcy claim is filed and there is settlement secured creditors will get paid before unsecured creditors. Secured creditors is when the debtor borrows money and gives a security interest in some type of asset so if he should default on the loan, then the lender will be able to seize the assets. After the secured creditors are paid and should there be any money left over, then the unsecured creditors will get paid. Thus, JP Morgan, a secured creditor and the largest creditor of the firm will get paid first.
If you are facing financial hardships, whether they are in the form of credit card debt or auto loan payments that have piled up, then you should speak with an experienced attorney. Mr. Lutzky, of Jayson Lutzky, P.C. offer free in person consultations. He can help you determine if bankruptcy is right for you. Mr. Lutzky has over 30 years of experience practicing law and has represented thousands of highly satisfied clients. To set up a free consultation, call our office at 718-514-6619 or visit