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Diamond McCarthy Wins Landmark Victory in Dewey & LeBoeuf Litigation

October 30, 2014

Wall Street Journal, New York Law Journal, Law360, Above the Law

Diamond McCarthy Wins Landmark Victory in Dewey & LeBoeuf Litigation
 
On October 29, 2014, Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York issued a 39-page published opinion holding that partners in New York registered limited liability partnerships are strictly liable for compensation they receive while their partnership is insolvent.  The Court agreed with Diamond McCarthy’s argument that owners of an insolvent LLP cannot pay themselves ahead of true creditors.  Ruling on a question of first impression in New York, the Court further held that section 277 of the New York Debtor & Creditor Law applies to partners in an LLP.  
 
Judge Glenn’s decision came following cross-motions for summary judgment filed by Diamond McCarthy on behalf of Alan M. Jacobs, the Liquidating Trustee for the Dewey & LeBoeuf Liquidation Trust and by a group of former partners of Dewey & LeBoeuf.  The Liquidating Trustee has sued the former partners to recover equity distributions they received while Dewey & LeBoeuf was insolvent. 
 

The Wall Street Journal, the New York Law Journal, Law 360, and Above the Law have all covered the decision. (Subscription may be required.)

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