Dewey Had Paid $7 Million Fees in Two Months Trying to Evade the Inevitable

On Thursday, documents filed at the Manhattan bankruptcy court revealed a number of new facts about the last days of Dewey. For one, though we knew that the law firm had been trying to negotiate with Greenberg Traurig, SNR Denton and Patton Boggs for a merger or buyout, it came as news that Dewey had also negotiated with and submitted financial statements to Baker & McKenzie and Reed Smith. The new bankruptcy documents also showed that Dewey had paid more than $7 million in fees to bankruptcy lawyers and management consulting firms in the months prior to filing under Chapter 11.

For work performed between February and May 2012, law firm Kramer Levin Naftalis & Frankel received $1.6 million. For work performed between April and May, Togut, Segal & Segal received $1.4 million and Zolfo Cooper received $600,000. While Zolfo Cooper had taken the lead in drafting Dewey’s bankruptcy plans, and Togut is the firms lead bankruptcy counsel, a consulting firm FTI Consulting, Inc received more than $1 million only for work done in May. FTI Consulting specializes in restructuring mergers and acquisitions.

According to industry experts, these big legal and consulting bills resulted from last-minute attempts by the Dewey management to evade Chapter 11 at all costs. Most of the firms, which had received financial statements from Dewey prior to its bankruptcy, acknowledged receiving the statements but denied the existence of any merger talks between Dewey and them.

The 355-page document filed at the Manhattan bankruptcy court showed that in 2010, Dewey earned revenue of $628.4 million, and in 2011, it netted $655 million. The figures did not include revenues from many of its foreign offices.