More Than $6.26M Should Be Cut From 401(k) Claim, Says Dewey & LeBoeuf Trustee

by Tara Arick on June 12, 2013 · 0 comments

in Contract Law

- From LexisNexis® Mealey’s™ Daily Legal News.

The liquidating trustee in the Chapter 11 bankruptcy of former law firm Dewey & LeBoeuf on June 7 objected to a claim filed by a firm acting as the fiduciary for Dewey & LeBoeuf’s 401(k) plan, disputing the fiduciary’s claims for 2011 unpaid profit-sharing contributions for eligible partners who have resolved and released their claims against the bankruptcy estate (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).

Dewey & LeBoeuf filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on May 28, 2012.

401(k) Contributions

Gallagher Fiduciary Advisors LLC filed a proof of claim for $ 7,474,736.55 for unpaid 2011 contributions to the 401(k) it managed for Dewey & LeBoeuf.

Alan M. Jacobs, the liquidating trustee for the Dewey & LeBoeuf Liquidation Trust, objected to Gallagher’s claim pursuant to 11 U.S. Code Sections 105, 502 and 510. The liquidating trustee argues that Gallagher’s claim should be reduced by $ 6,626,777 for 2011 profit-sharing contributions that were expressly waived and released by 224 settling partners as part of the partner settlements in the bankruptcy proceeding.

In 2009, Dewey & LeBoeuf started the 401(k) plan at issue, according to court records. Under the plan, the firm made profit-sharing contributions each calendar year on behalf of each participant eligible to receive those contributions.

Profit Sharing

The 401(k) plan provides two classification groups for allocating the profit-sharing contribution: eligible partners and eligible staff employees, according to court records.

In the beginning of 2012, Dewey & LeBoeuf made a portion of its 2011 profit-sharing contributions to the 401(k) plan, with a plan to pay the remaining 2011 contributions by Sept. 15, 2012, according to court records.

However, the firm filed for Chapter 11 bankruptcy before the remaining contributions were made.

Agreements

Just before it filed for Chapter 11 bankruptcy, Dewey & LeBoeuf appointed Gallagher as fiduciary and Benefit Plans Administrative Services Inc. (BPAS) as the administrator of the plan.

In August 2012, 476 former partners entered into a form of settlement agreement and mutual release that waived and released their claims arising under the 401(k) plan for unpaid profit-sharing contributions for 2011, the liquidating trustee says.

In February 2013, 78 retired partners also waived and released their claims arising under the 401(k) plan, the liquidating trustee argues.

Consequently, the liquidating trustee contends that the claims asserted by Gallagher should be reduced.

Dewey & LeBoeuf is represented by Albert Togut and Togut Segal & Segal in New York. The liquidation trustee and the Liquidation Trust are represented by Scott E. Ratner, Brian F. Moore and Michael D. Hamersky of Togut Segal & Segal. BPAS is represented by Douglas B. Rosner and Wayne H. Miller of Gouston & Storrs in Boston.

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