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TOGUT, SEGAL & SEGAL LLP One Penn Plaza, Suite 3335 New York, New York 10119 (212) 594-5000 Albert Togut Scott E. Ratner Steven S. Flores Anthony F. Pirraglia Counsel to the Debtor and Debtor in Possession

HEARING DATE: OBJECTION DEADLINE:

February 27, 2013 at 10:00 a.m. February 20, 2013 at 4:00 p.m.

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X : : In re: : : DEWEY & LEBOEUF LLP, : : : Debtor. : : ---------------------------------------------------------------X

Chapter 11 Case No. 12-12321 (MG)

DEBTORS APPLICATION PURSUANT TO SECTION 105(a) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9019(a) FOR AN ORDER APPROVING A SETTLEMENT AGREEMENT AMONG THE DEBTOR, THE OFFICIAL COMMITTEE OF FORMER PARTNERS, THE AD HOC COMMITTEE OF RETIRED PARTNERS OF LEBOEUF, LAMB, LEIBY & MACRAE AND CERTAIN SETTLING PARTNERS TO THE HONORABLE MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE: Dewey & LeBoeuf LLP, as debtor and debtor in possession (the Debtor or DL), makes this application (the Motion) pursuant to section 105(a) of title 11 of the United States Code, 11 U.S.C. 101-1532 (the Bankruptcy Code) and Rule 9019(a) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) for an order approving a settlement (the Settlement) among the Debtor, the Official Committee of Former Partners (the FPC), the Ad Hoc Committee of Retired Partners of LeBoeuf, Lamb, Leiby & MacRae (the AHC together with the FPC, the Partner Committees,

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and together with the Debtor, the Parties), and certain Settling Partners (defined below) (the Parties, together with the Settling Partners, the Settling Parties) evidenced by a certain settlement agreement (the Settlement Agreement), among the Debtor, the FPC, and the AHC, and certain letter agreements signed by Settling Partners (each, a Letter Agreement).1 In support of this Motion, the Debtor respectfully represents: INTRODUCTION The AHC, FPC and the former partners they represent have been the most organized and vocal groups of objectors in the Debtors Bankruptcy Case (defined below). It has been their view that (among other things) as former partners, who completed their service, and in many cases retired from the Debtor years before the Debtors collapse, they did not owe any liability to the Debtors estate for payments made to them pre-petition and that they should be paid their retirement benefits and severance payments. Thus, it was their contention that they should be treated as creditors and not potential defendants by the estate. The retired partners represented by the FPC and AHC assert that they are unique in the sense that, unlike the active partners who were able to find new employment and maintain an income stream, most in this group lost their principal source of income and have no ready way to replace it. They also believe that they hold unsecured claims as opposed to equity interests. They have vigorously argued to this Court that they should be treated differently than other former partners, given their status as retirees. Although many former partners that the Debtor believes had comparable circumstances and arguments eventually joined the PCP (defined below),

A copy of the Settlement Agreement is attached to the Declaration of Steven S. Flores, Esq., dated February 7, 2013 (the Flores Declaration) as Exhibit 1. A copy of the form of Letter Agreement is annexed to the Settlement Agreement as Exhibit A.

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those in the AHC and others in the FPCs constituency who did not join the PCP chose to litigate in a formidable way. The AHC, with the support of the FPC, whose members sought the appointment of an examiner, became the only true objectors to the Debtors PCP and the only groups to appeal this Courts PCP Order (defined below). The FPC and AHC intended to forcefully prosecute their Appeals (defined below) of the PCP Order, contest confirmation of the Debtors Plan (defined below), and aggressively litigate the more than $80 million of proofs of claims that have been filed in the Debtors Bankruptcy Case on behalf of retired partners who have not already joined the PCP -- delaying confirmation, creating uncertainty, and, most importantly, increasing the administrative costs that have already burdened this estate. After months of hard-fought litigation and negotiation, a settlement with the FPC and AHC finally has been reached. It is the Debtors understanding and expectation that many of the Partner Committees constituent former partners who have not already joined the PCP will join the Settlement by executing and delivering Letter Agreements.2 This is a narrow settlement of pending and threatened litigation. In the Settlement, the Debtor is giving a broad release to the other Settling Parties in exchange for the settlement of litigation and other obstacles to confirmation, and reciprocal releases by the Committees and Settling Partners (which will resolve the claims filed by those former partners), and the payment of a fixed Settlement Amount (defined below). The Settling Partners will not participate in the PCP and thus, will not receive its benefits (such as a full release from other former partners who participate in the PCP).

Those who have already signed up for the PCP will continue in the PCP and pay the amounts previously committed.

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The Settlement provides significant benefits to the Debtor, its estate and creditors. The Debtor is resolving all pending disputes with the AHC and the FPC, as well as with their constituents who decide to opt in to the Settlement. By way of example only, the Partner Committees and the Settling Partners have agreed to withdraw the Appeals of the PCP Order, waive their claims, not object to confirmation of the Debtors Plan, and make lump-sum settlement payments to the Debtors estate. The AHC has agreed that it shall bear all the legal fees and expenses incurred by it in connection with this Bankruptcy Case and waives any right to file an application under section 503 of the Bankruptcy Code. The FPC has agreed that it will not litigate claims objections and its counsel will be paid no more than $1.35 million pursuant to its final fee application, which will result in a substantial savings to the estate. Most importantly, the Settlement, if approved, will clear the path to confirmation of the Debtors Plan on a broadly consensual basis. BACKGROUND General Background 1. On May 28, 2012 (the Petition Date), the Debtor filed a voluntary

petition in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court), Case Number 12-12321 (MG) (the Bankruptcy Case) for relief under Chapter 11 of the Bankruptcy Code. 2. On May 31, 2012, the United States Trustee for the Southern District

of New York appointed the Official Committee of Unsecured Creditors (the Creditors Committee) and the FPC [Docket Nos. 43, 44, respectively]. 3. On May 30, 2012, the AHC filed the Verified Statement of Dorsey &

Whitney LLP Regarding Representation of Ad Hoc Committee of LeBoeuf 1990 Pension Plan Retirees Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 39], which was
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first amended on September 19, 2012 [Docket No. 490] and amended again on December 22, 2012 [Docket No. 762]. The Examiner Motion and PCP 4. On August 8, 2012, the AHC filed the Motion of Ad Hoc Committee of

Retired Partners of LeBoeuf, Lamb, Leiby & MacRae for Appointment of a Trustee or, in the Alternative, for the Appointment of an Examiner Pursuant to Sections 1104(a) and 1104 (c) of the United States Bankruptcy Code [Docket No. 329] (the Examiner Motion), requesting the appointment of a trustee or, in the alternative, an examiner to investigate claims released under the PCPs. On August 16, 2012, the FPC filed a statement [Docket No. 348] in support of the appointment of an examiner (but did not support the AHCs request for a trustee, which was later withdrawn by the AHC). 5. On August 29, 2012, the Debtor filed the motion to approve its

global settlement with more than 440 of the Debtors former partners (the PCP) pursuant to Bankruptcy Rule 9019 (the PCP Motion), and supporting documents, including factual declarations and forms of the PCPs [Docket Nos. 399, 400, 401, 402].3 6. Both Partner Committees contested the PCP Motion and

aggressively prosecuted the Examiner Motion. Beginning on September 20, 2012, the Bankruptcy Court held a two-day contested evidentiary hearing (the PCP Hearing) to decide the Examiner Motion and PCP Motion [Docket Nos. 506, 507]. On October 9, 2012, the Bankruptcy Court denied the Examiner Motion and approved the PCP Motion [Docket No. 538] (the PCP Order).

The Debtor has described, in detail, the process and efforts undertaken by the Debtor to develop and promulgate the PCPs. Those filings are incorporated by reference, and their contents will not be repeated here. Only background pertinent to the instant matters is set forth herein.

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The Appeals 7. On October 11, 2012, and October 22, 2012, the FPC and the AHC

filed notices of appeal of the PCP Order [Docket Nos. 545 and 563]. 8. The United States District Court for the Southern District of New

York consolidated the appeals on December 6, 2012 (consolidated, the Appeals). 9. 10. The Appeals have been fully briefed and are sub judice. Pursuant to the terms of the Settlement Agreement, now that the

Settlement Agreement has been executed, the Partner Committees will promptly seek a stay of the Appeals. See Flores Declaration Exhibit (Ex.) 1 at 13. Other Disputes 11. Constituents of the FPC and AHC (who have not already joined the

PCP) have filed more than 80 proofs of claim asserting claims for more than $80 million. The Debtor has objected to these claims. See Declaration of Jonathan A. Mitchell, dated February 7, 2013 (the Mitchell Settlement Declaration) 11. 12. On January 7, 2013, the Debtor filed its second amended plan of

liquidation [Docket No. 807] (the Debtors Plan) and its disclosure statement in support thereof [Docket No. 808]. 13. On the same day, the Bankruptcy Court entered an Order (I)

Approving the Debtors Disclosure Statement; (II) Scheduling Hearing on Confirmation of the Plan; (III) Establishing a Deadline and Procedures for Filing Objections to Confirmation of the Plan; (IV) Establishing a Voting Deadline for Receipt of Ballots; (V) Approving Solicitation Procedures, Distribution of Solicitation Packages, and Establishing a Deadline and Procedures for Temporary Allowance of Claims for Voting Purposes; (VI) Approving the Form of Ballots and Voting Instructions; and (VII) Approving Form and Manner of Notice of Hearing on Confirmation and Related Issues [Docket No. 810].
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14.

On January 21, 2013, the FPC and AHC filed motions for temporary

allowance of their constituents claims for the purpose of voting on the Debtors Plan [Docket Nos. 874, 875 respectively]. 15. On or about January 22, 2013, the AHC served discovery relating to

the merits of, and objections to, its members claims [Docket No. 878]. The AHC also contends that the discovery it seeks relates to confirmation of the Debtors Plan, which is set for a hearing before this Court on February 27, 2013. Each of the Partner Committees has advised the Debtor that, absent consensual resolution of their issues, they intend to object to confirmation of the Debtors Plan. Negotiations of the Settlement Agreement 16. The Parties have been working to negotiate a settlement since well

before the PCP Hearing. Negotiations have continued over the last six months, with the involvement of professionals for JPMorgan Chase Bank, NA, as collateral agent for the Secured Lenders4 (the Collateral Agent) and the Creditors Committee. As a result of this substantial involvement, the Settlement represents a hard-fought, negotiated bargain that has the support of Secured Lenders holding a majority in amount of the Secured Lender Claims and the Creditors Committee. See Mitchell Settlement Declaration 6-7, 19.

Secured Lenders means lenders under a secured credit agreement dated as of April 16, 2012 (the Credit Agreement), together with holders of senior secured notes issued by the Debtor under a note purchase agreement (the Note Purchase Agreement). Secured Lender Claims means the claims asserted by the Secured Lenders under the Credit Agreement and Note Purchase Agreement.

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THE PROPOSED SETTLEMENT5 17. The Settlement was negotiated with the Partner Committees and

offered to the 125 former partners (or in some cases, beneficiaries of deceased former partners) represented by the FPC and the AHC who received payments from any of DLs non-qualified retirement plans or of-counsel payments during the period January 1, 2011, through the Petition Date, and who did not already agree to participate in the PCP. The Settlement resolves the pending and threatened litigation involving the Partner Committees, as well as the disputed proofs of claim and threatened litigation of the Settling Partners. Retirees who previously agreed to the PCP are not impacted by the Settlement and will continue their commitment to pay the amounts and to exchange (and enjoy the benefits of) the broad multi-party releases set forth in their PCP agreements. See Mitchell Settlement Declaration 9-10, 12. 18. The Settling Partners represented by the Partner Committees will

not participate in the PCP. Thus, they will not receive the benefits of the PCP, including, but not limited to, the protections of the Bar Order (as defined in the PCP Motion), a release from former partners who decided to participate in the PCP or the ability to make their required contributions over a three-year period of time -- all important components of the PCP. See Mitchell Settlement Declaration 13. Moreover, there are additional obligations in the Settlement Agreement (that were not included in the PCP), which are described below. 19. Each person who was offered the opportunity to participate, and

then so elected to participate, in the Settlement (each, a Settling Partner) has agreed to

The summary of the terms of the Settlement set forth herein is provided for the convenience of the Bankruptcy Court and parties in interest and does not modify the terms of the Settlement Agreement in any manner. To the extent terms of this Motion and terms of the Settlement Agreement are inconsistent or undefined, the terms of the Settlement Agreement shall govern.

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pay, among other things, the lesser of (i) 25% of combined of-counsel or special counsel compensation and non-qualified retirement plan payments paid by the Debtor and received by the Settling Partner in 2011 and 2012, or (ii) $5,000. Each Settling Partner has further agreed to reimburse the Debtor at a rate of 60% for any tax advances made by the Debtor on behalf of the Settling Partner during 2011 and 2012. Finally, each Settling Partner has agreed to make a payment to the Debtor on account of all other amounts received from the Debtor during 2011 and 2012, if any, which payment is calculated using the same table included in the PCP. The total to be paid by any Settling Partner is that Settling Partners Settlement Amount. See Mitchell Settlement Declaration 14. 20. The Settling Partners have further agreed, among other things (i) to

release any claims they have asserted against the Debtors estate on the terms and conditions set forth in the Settlement Agreement, subject to the approval of the Bankruptcy Court, and (ii) to assign to the Debtor certain defined claims they may possess against third parties. The FPC and AHC have also agreed to stay, then dismiss, the pending Appeals of the PCP Order. 21. Key terms are further summarized below:6

Eligible Participants. Certain former partners (or, in some cases, their beneficiaries) are eligible to participate in the Settlement. The constituents given the opportunity to become Settling Partners is limited to the 125 partners (or their beneficiaries) represented by the FPC and/or AHC who did not participate in the PCP and received payments in 2011 and/or 2012 from any of DLs nonqualified retirements plans or as of-counsel or special counsel compensation. Mitchell Declaration 9; see also Flores Declaration Ex. 1 at Ex. B.7

Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Settlement Agreement The Settlement Amounts for eligible participants has been redacted from Exhibit B to the Settlement Agreement annexed to the Flores Declaration. An unredacted copy can be provided to the Court upon request. The Debtor shall disclose a list of Settling Partners and their corresponding Settlement Amounts on or before February 18, 2013, at 4 p.m.

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The Releases. The Settling Parties are exchanging broad mutual releases, including a release of Unfinished Business Claims for the Settling Partners. The Settling Parties do not release Steven H. Davis (DLs former Chairman); Stephen DiCarmine (DLs former Executive Director); or Joel Sanders (DLs former Chief Financial Officer). Flores Declaration Ex. 1 at 2, 3. Covenants and Assignment of Claims. The Partner Committees and the Settling Partners covenant that they will not file any claim against the Debtor from the date of the Settlement Agreement. Moreover, to the extent the Settling Partners or the Partner Committees have any direct claims against: (i) former Partners; (ii) any former or current employee of the Debtor or its Predecessor Entities or any Related Entity, including, without limitation, claims against Davis, DiCarmine and Sanders; or (iii) any former or current agent or advisor of the Debtor or its Predecessor Entities or any Related Entity, those claims are irrevocably assigned to the Debtor. Id. at 4-5. Effective Date. The Settlement Agreement shall become effective when the last of the following events has occurred (the Effective Date): (a) the Settlement Agreement has been approved by a Final Order; (b) the occurrence of the effective date of the Debtors Plan; (c) the dismissal of the Appeals, with prejudice, by the FPC and the AHC; and (d) each of the following individuals enter into a Letter Agreement: David Bicks, Cameron MacRae, Hugh McCormick, Ralph Mabey, John Huhs, Davis Robinson.8 Id. at 12. Payment. The Settling Partners shall, within thirty (30) calendar days of the publication of the Effective Date Notice, pay to the Debtor (or its successors and assigns) the Settlement Amount, in cash.9 Flores Declaration Ex. 1 at 15. Cooperation. The FPC, the AHC and the Settling Partners will not oppose confirmation of the Debtors Plan, or any relief sought in connection therewith that is not inconsistent with the Settlement Agreement, and if any Settling Partner votes against the Debtors Plan, such vote shall be disregarded by the balloting agent in the Bankruptcy Case. Id. at 10. Fees Concessions. The AHC and the Settling Partners agree that they shall bear all legal fees and expenses incurred by them in connection with the Bankruptcy Case and shall waive any administrative claims against the Debtors estate for reimbursement of legal fees and expenses, or otherwise. Further, the FPC has

Provided, however, if, as of the date of the hearing on this Motion, the Debtor does not have aggregate Settlement Amount commitments from Settling Partners of at least $315,000 or such lessor amount as may be acceptable to the Debtor in the exercise of its discretion (and with the consent of the Creditors Committee and Secured Lenders holding a majority in amount of Secured Lender Claims), the Settlement Agreement may be terminated by the Debtor by the hearing date. See Flores Declaration Ex. 1 at 12. Unlike the PCP, there is no option to pay over a three-year period by giving a note.

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agreed that its counsel will be paid no more than $1,350,000 pursuant to its final fee application submitted to the Bankruptcy Court. Id. at 11. Dismissal of Appeals. Promptly upon execution of the Settlement Agreement, the Partner Committees will jointly seek a stay of the Appeals. Promptly upon the latter of (i) the effective date of the Debtors Plan or (ii) the approval of the Settlement Agreement by a Final Order, the Partner Committees shall dismiss the Appeals with prejudice. The AHC (or the Ad Hoc Members who are also Settling Partners if the AHC is disbanded or otherwise ceases to exist) agrees that, following execution of the Settlement Agreement, the AHC shall, at its own expense, take the actions reasonably necessary to obtain and maintain a stay of the Appeals, and, upon the later of (i) and (ii) above, obtain dismissal of the Appeals. Id. at 13. Discovery. Upon execution of the Settlement Agreement, the AHC shall withdraw any and all pending discovery demands served on the Debtor or any of its agents in this Bankruptcy Case, and the Partner Committees and the Settling Partners agree not to pursue any new discovery relating to claims objections by the Debtor or to file any pleadings or documents with the Bankruptcy Court in connection with the claims resolution process. The Partner Committees and the Settling Partners further agree that any response filed by any of them to the Debtors claims objections will be deemed withdrawn upon occurrence of the Effective Date. Id. at 8-9.10 The Letter Agreement. The Letter Agreement allows each Settling Partner to participate in the Settlement in exchange for payment of that Settling Partners Settlement Amount.11 It is not intended to alter, or amend, the terms of the Settlement Agreement. Id. at 1; Flores Declaration Ex. 1 at Ex. A. JURISDICTION 22. This Court has jurisdiction to consider this matter pursuant to 28

U.S.C. 1334 and the Amended Standing Order [M10-468], dated January 31, 2012

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Importantly, the Debtors and the AHC have further agreed that the discovery served by the AHC on the Debtor will be stayed until the occurrence of the Effective Date, at which time, the discovery will be deemed withdrawn. The claims objections filed by the Debtor to the claims filed by the settling AHC members will be stayed until the occurrence of the Effective Date, at which time, the settling AHC members claims will be withdrawn. The non-settling members claims will remain subject to the pending claims objections. In the unlikely event the Effective Date does not occur by April 30, 2013, the response date for the discovery served by the AHC relating to the claims filed by its members, and the responsive dates and hearing dates on the claims objections filed by the Debtor relating to the settling AHC members, will be rescheduled by mutual agreement of the parties or as ordered by the Court. As noted above, Letter Agreements were only offered to the 125 former partners (or their beneficiaries) represented by the FPC and AHC, who received payments in 2011 and/or 2012 from any of DLs non-qualified retirements plans or of-counsel or special counsel compensation, who did not participate in the PCP. No other former partners may participate in the Settlement.

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(Preska, C.J.). This is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A). The Court can exercise its subject matter jurisdiction pursuant to 28 U.S.C. 157(b)(1). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. RELIEF REQUESTED 23. By this Motion, the Debtor respectfully requests the entry of an

order pursuant to section 105(a) of the Bankruptcy Code and Bankruptcy Rule 9019(a), approving the Debtors entry into the Settlement Agreement. As discussed in further detail below, the Settlement Agreement both provides a fair and equitable resolution to various disputes and is in the best interests of the Debtor, its estate and creditors. BASIS FOR RELIEF REQUESTED Legal Standards Governing Approval of the Settlement Agreement 24. Section 105 of the Bankruptcy Code permits a bankruptcy court to

issue any order that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). Bankruptcy Rule 9019(a) governs the procedural prerequisites for approval of a settlement and provides, in relevant part, that [o]n motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement. Fed. R. Bankr. P. 9019(a). Accordingly, section 105(a) of the Bankruptcy Code together with Bankruptcy Rule 9019(a) empower a bankruptcy court to approve proposed compromises or settlements. Vaughn v. Drexel Burnham Lambert Grp., Inc. (In re Drexel Burnham Lambert Grp., Inc.), 134 B.R. 499, 505 (Bankr. S.D.N.Y. 1991); In re Texaco Inc., 84 B.R. 893, 901-02 (Bankr. S.D.N.Y. 1988). 25. Significantly, the decision to approve a compromise or settlement is

subject to the sound discretion of the bankruptcy court. Nellis v. Shugrue, 165 B.R. 115,

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123 (S.D.N.Y. 1994) (Sotomayor, J.). In exercising such discretion, a bankruptcy court must determine that the proposed settlement is both fair and equitable and in the best interests of the debtors estate. See Motorola, Inc. v. Official Comm. of Unsecured Creditors (In re Iridium Operating LLC), 478 F.3d 452, 462 (2d Cir. 2007) (applying fair and equitable standard to settlements pursuant to Bankruptcy Rule 9019); In re Enron Corp., No. 02 Civ. 8489 (AKH), 2003 WL 230838, at *2 (S.D.N.Y. Jan. 31, 2003) (A bankruptcy court may approve a settlement where the proposed settlement is both fair and equitable and in the best interests of the estate. (internal quotations omitted)). It is well established that in exercising its discretion to approve a proposed settlement, a bankruptcy court may consider general public policy favoring settlements. See In re Hibbard Brown & Co., Inc., 217 B.R. 41 (Bankr. S.D.N.Y. 1998) (recognizing that settlements are generally favored); see also Shugrue, 165 B.R. at 123 (noting that settlements are not only favored, but are encouraged). 26. In evaluating whether a proposed compromise or settlement is fair

and equitable, a court should consider the following interrelated factors: the balance between the litigations possibility of success and the settlements future benefits; the likelihood of complex and protracted litigation, with its attendant expense, inconvenience and delay, including the difficulty in collecting on any judgment; the paramount interests of the creditors, including each affected classs relative benefits and the degree to which creditors either do not object to or affirmatively support the proposed settlement; whether other parties in interest support the settlement; the competence and experience of counsel supporting, and the experience and knowledge of the bankruptcy court judge reviewing, the settlement; the nature and breadth of releases to be obtained; and the extent to which the settlement is the product of arms length bargaining.
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In re Iridium Operating LLC, 478 F.3d at 462 (citing In re WorldCom, Inc., 347 B.R. 123, 137 (Bankr. S.D.N.Y. 2006)). 27. Although a court must consider all . . . factors relevant to a fair

and full assessment of the wisdom of the proposed compromise, Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968), it need not conduct a mini-trial of the merits of the claims being settled, Cosoff v. Rodman (In re W.T. Grant, Co.), 699 F.2d 599, 608 (2d Cir. 1983), or conduct a full independent investigation. In re Drexel Burnham Lambert Grp., Inc., 134 B.R. 493, 496 (Bankr. S.D.N.Y. 1991). 28. In order to evaluate the necessary facts, a court may rely on the

opinion of the debtor, settlement parties and professionals. See In re Purofied Down Prods. Corp., 150 B.R. 519, 522 (S.D.N.Y. 1993); In re Chemtura Corp., 439 B.R. 561, 594 (Bankr. S.D.N.Y. 2010); see also In re MF Global Inc., Case No. 112790 (MG), 2012 WL 3242533, at *5 (Bankr. S.D.N.Y. Aug. 10, 2012) (recognizing the business judgment of the debtor in recommending a settlement should be considered). A court need only ensure that the settlement does not fall below the lowest point in the range of reasonableness. In re Adelphia Commcns Corp., 327 B.R. 143, 159 (Bankr. S.D.N.Y. 2005) (internal quotation omitted) (emphasis added).

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Bankruptcy Court Approval of the Settlement Agreement Is Appropriate 29. The Settlement Agreement is fair, equitable and in the best interests

of the Debtors estate and creditors. In light of the Iridium factors, the Settlement Agreement should be approved because, inter alia, it (i) resolves the pending Appeals of the PCP Order without further expense or delay; (ii) resolves all other pending disputes among the Settling Parties, including, but not limited to, disputes relating to all Settling Partners proofs of claim; (iii) guarantees the Settling Parties will not object to confirmation of the Debtors Plan; (iv) caps, and significantly reduces, certain legal fees at issue in this case; and (iv) quickly brings additional cash into the Debtors estate. See Mitchell Settlement Declaration 15. i. The Outcome of Litigation Is Uncertain 30. The first Iridium factor reflects the Supreme Courts view that a

court should form an intelligent and objective opinion of the probability of success in the underlying litigation and inherent costs of such litigation. TMT Trailer, 390 U.S. at 424. In evaluating the reasonableness of a settlement, a court should form an educated estimate of the complexity, expense, and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise. Id. 31. The Settlement Agreement resolves (a) claims arising under

Chapter 5 of the Bankruptcy Code; (b) claims for reimbursement of tax advances; (c) claims for unpaid capital contributions; (d) claims based on breaches of fiduciary duty; and (e) claims based on contractual obligations under DLs partnership agreement(s) and non-qualified retirement plans. As discussed in greater detail in the

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PCP Motion, the Debtor and its professionals identified numerous defenses and counterclaims that former partners, including the Settling Partners, might assert.12 Pursuing any or all of these claims would raise significant and complex issues of fact and law, all of which carry litigation risk and significant cost. See Mitchell Settlement Declaration 15. 32. The Settlement Agreement also resolves a number of pending

disputes that could delay the progression of this Bankruptcy Case, including: Resolution of the Appeals. The Settlement Agreement resolves the pending Appeals. Even this Court has expressed at least some doubt about the case moving forward while the Appeals are pending. Timing issues aside, the appointment of an examiner, or reversal of the PCP, would almost certainly result in the conversion of this Bankruptcy Case to a Chapter 7 proceeding. Moreover, enormous time and effort in this Bankruptcy Case has been spent on the negotiation, promulgation and approval of the PCP. By settling with the only appellants to the PCP Order, the Settlement helps ensure that this critical global compromise is not unwound -- which represents a substantial benefit to the Debtor (and the more than 440 former partners who are waiting for their PCPs to become effective). Resolution of Confirmation-Related Disputes. Because the Settlement also secures support for confirmation of the Debtors Plan, the Settlement will streamline confirmation proceedings, and reduce the number of objections that will have to be resolved by the Debtor (or this Court). Resolution of Claim-Related Disputes. The Settlement also resolves disputes concerning the Settling Partners proofs of claim, several of which may assert priority treatment under section 507 of the Bankruptcy Code. These claims will be deemed withdrawn upon the Effective Date of the Settlement, which will significantly reduce expenses and disputes related to claim reconciliation.

See Mitchell Settlement Declaration 18. The cost savings to the estate resulting from the resolution of those disputes cannot be overstated. Indeed, litigating each of those disputes would require the Debtors estate not only to pay for the Debtors own legal

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For the convenience of the Court, that discussion will not be repeated here but is incorporated by reference.

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and financial advisors, but also those of the FPC, Creditors Committee and the Secured Lenders. 33. Finally, the Settlement Agreement provides another important

benefit to the estate: cash. Under the terms of the Settlement, payments must be made within thirty (30) days of the Effective Date. Settling Partners may not pay by installments. ii. The Creditors Committee and the Secured Lenders Support the Settlement Agreement 34. The Debtor is informed that the Creditors Committee and Secured

Lenders holding a majority of the Secured Lender Claims support approval of the Settlement Agreement. See Mitchell Settlement Declaration 21. Counsel to the Collateral Agent actively participated in the negotiation of the Settlement Agreement. See Mitchell Settlement Declaration 7, 19. The result of this collaborative effort is a comprehensive Settlement Agreement that is fair, equitable, and in the best interests of the estate. See Mitchell Settlement Declaration 8, 22. iii. The FPC and the AHC Are Represented By Highly Skilled Counsel and Advisors 35. The Debtor, the FPC and the AHC have been represented by skilled

and experienced bankruptcy practitioners during the negotiations of the Settlement Agreement. See Mitchell Settlement Declaration 19. Courts have given this factor considerable weight. See In re Adelphia, 327 B.R. at 164; see also In re Chemtura Corp., 439 B.R. at 608 (No argument has been made, nor could any argument be made that counsel who put the Settlement together were anything less than highly skilled in their craft . . . .).

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iv.

Nature and Breadth of Releases Are Proper 36. The releases proposed to be exchanged under the Settlement

Agreement are appropriate, and the Debtors releases are no broader than those approved by this Court in the PCP Order. See Mitchell Settlement Declaration 20. 37. It is clear that the Debtor is vested with the power to settle the

estates claims and therefore is authorized to release the claims in the Settlement Agreement. See Police & Fire Retirement Sys. v. Ambac Fin. Grp., Inc. (In re Ambac Fin. Grp., Inc.), No. 11 civ 7529 (NRB), 2011 WL 6844533, at *2 (S.D.N.Y. Dec. 29, 2011) (quoting Smart World Techs., LLC v. Juno Online Servs., Inc. (In re Smart World Techs., LLC), 423 F.3d 166, 175 (2d Cir. 2005)). v. The Settlement Agreement Is the Product of Arms Length Bargaining 38. The Settlement Agreement is indisputably the product of good-

faith, arms length negotiations that took place over six months involving the Debtor, the FPC, the AHC, the Collateral Agent, the Creditors Committee and their counsel. See Mitchell Settlement Declaration 6, 19. 39. Accordingly, entry into the Settlement Agreement is in the Debtors

best interest. See Mitchell Settlement Declaration 8. The Debtor has reasonably and appropriately exercised its sound business judgment in entering into the Settlement Agreement to resolve the disputes related to the Appeals, confirmation, claim objections, and all other disputes with the FPC and AHC and the Settling Partners (while reducing, or effectively disallowing, a significant amount of fees in the process). See Mitchell Settlement Declaration 22.

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NOTICE 40. Notice shall be provided in accordance with this Courts order

concerning the Debtors ex parte motion filed concurrently herewith to shorten the time for notice of the hearing to consider the Motion. NO PRIOR APPLICATION 41. No previous motion for the relief sought herein has been made to

this or any other Court. CONCLUSION WHEREFORE, the Debtor respectfully requests entry of the order annexed hereto as Exhibit 1, and for such further and different relief as is just and proper. Dated: New York, New York February 7, 2013 DEWEY & LEBOEUF LLP, By its Attorneys TOGUT, SEGAL & SEGAL LLP By: /s/ Albert Togut ALBERT TOGUT SCOTT E. RATNER STEVEN S. FLORES ANTHONY F. PIRRAGLIA One Penn Plaza, Suite 3335 New York, New York 10119 (212) 594-5000

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