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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
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X : In re: : : DEWEY & LEBOEUF LLP, : : Debtor. : : ---------------------------------------------------------------X
Chapter 11 Case No. 12-12321 (MG)
DECLARATION OF JONATHAN A. MITCHELL IN SUPPORT OF DEBTOR’S 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 I, Jonathan A. Mitchell, make this declaration (the “Declaration”) under 28 U.S.C. § 1746 and state: 1. I am in all respects competent to make this Declaration which I
submit for all permissible purposes under the Federal Rules of Bankruptcy Procedure, the Federal Rules of Civil Procedure and Federal Rules of Evidence in support of the application of Dewey & LeBoeuf LLP, as debtor and debtor in possession (the “Debtor,” “DL” or the “Firm”), pursuant to section 105(a) of the Bankruptcy Code and Bankruptcy
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Rule 9019(a) for an order approving a settlement agreement among the Debtor, the FPC, the AHC and certain Settling Partners (the “Motion”).1 2. I am a senior managing director of Zolfo Cooper Management, LLC
(“Zolfo”) and am the Chief Restructuring Officer (“CRO”) of the Debtor. The Debtor approved my appointment as CRO to the Debtor effective May 16, 2012, and I have functioned in such capacity since that time. On July 12, 2012, the Court authorized the Debtor to engage Zolfo to perform services in furtherance of the wind down of the Debtor’s operations. I make this Declaration based on personal knowledge. 3. If called upon to testify, I could and would testify competently to
the facts set forth herein. Experience of Jonathan Mitchell and Zolfo 4. I have over 25 years of diversified business experience, providing
both interim management and advisory services to a variety of clients. 5. Zolfo is one of the world’s leading interim management, financial
advisory and litigation support firms, with a team of restructuring and litigation specialists in North America, advising debtors, creditors, investors and court-appointed officials in formal bankruptcy proceedings and out-of-court workouts, and has played key roles in numerous public record engagements. Negotiations with the Partner Committees 6. last six months. 7. Professionals for the Debtor, the Collateral Agent and the The Parties have been working to negotiate a settlement over the
Creditors’ Committee actively participated in the negotiation of the Settlement.
Capitalized terms not defined herein shall have the meaning ascribed to them in the Motion.
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The result of this collaborative effort is a Settlement Agreement,
which I believe is fair, equitable, and in the best interests of the estate. Proposed Settlement 9. The Settlement was negotiated with the Partner Committees and
offered to the 125 former partners (or, in some cases, their beneficiaries) represented by the FPC and the AHC who received payments from any of DL’s non-qualified retirement plans or as of-counsel or special counsel compensation during the period January 1, 2011, through the Petition Date, and who did not already agree to participate in the PCP. 10. The Settlement primarily 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. 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. 12. 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. 13. 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, 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.
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Each Settling Partner has agreed to, among other things, pay the
“Settlement Amount,” which is the sum of: i. The lesser of (a) 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 (b) $5,000; Reimburse 60% of any tax advances made by the Debtor on behalf of the Settling Partner during 2011 and 2012; and An amount calculated using the same progressive payment table applied in formulating the PCP, on account of any other amounts received from the Debtor during 2011 and 2012.
The Settlement Agreement Is In the Best Interest of the Debtor’s Estate and Creditors 15. The Settlement Agreement should be approved because, among
other things, 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 Debtor’s Plan; (iv) caps, and significantly reduces, certain legal fees at issue in this case; and (v) quickly brings additional cash into the Debtor’s estate. 16. 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 DL’s partnership agreement(s) and non-qualified retirement plans. The Debtor and its professionals identified numerous defenses and counterclaims that former partners, including the Settling Partners, might assert. 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. 4
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Thus, I believe that the Settlement Agreement is fair and reasonable
given the costs, delays and uncertainty associated with recovering from the Settling Partners in the absence of an agreement with the Settling Partners. 18. Other pending disputes in this Bankruptcy Case that the Settlement
Agreement resolves, include: • Resolution of the Appeals. The Settlement Agreement resolves the pending Appeals. 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 Debtor’s Plan, the Debtor believes that the Settlement will streamline confirmation proceedings, while reducing 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 Agreement, which will significantly reduce expenses and disputes related to claim reconciliation. 19. The Settlement Agreement was the result of extensive arm’s length
negotiations among my professionals and me, on behalf of the Debtor, and counsel for the FPC, the AHC, the Collateral Agent, the Creditors’ Committee, all skilled and experienced bankruptcy practitioners. As a result, I believe the Settlement represents a hard-fought, negotiated bargain. 20. I believe the releases and other consideration exchanged pursuant
to the Settlement Agreement are appropriate and necessary to consummate the Settlement.
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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. 22. Accordingly, I can attest that, in the Debtor’s business judgment,
the Debtor’s entry into the Settlement Agreement, and the Bankruptcy Court’s approval of the Settlement, is in the best interest of the Debtor, its estate, and its creditors. Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true and correct. Executed On: February 7, 2013 New York, New York
/s/ Jonathan A. Mitchell JONATHAN A. MITCHELL Chief Restructuring Officer DEWEY & LEBOEUF LLP