dewey & leboeuf amended plan filed dec. 31

7/30/2019 Dewey & LeBoeuf Amended Plan filed Dec. 31

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BLACKLINE: 12/31/12MARKED TO: 11/21/12 (FILED VERSION)

THIS IS NOT A SOLICITATION OF ACCEPTANCES OF THE FIRST AMENDEDCHAPTER 11 PLAN OF LIQUIDATION OF DEWEY & LEBOEUF LLP IN THISCHAPTER 11 CASE. ACCEPTANCES MAY NOT BE SOLICITED UNTIL ADISCLOSURE STATEMfENT STATEMENT HAS BEEN APPROVED BY THEBANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION WITHINTHE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE. THISDISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOTYET BEEN APPROVED BY THE BANKRUPTCY COURT AND IS SUBJECT TOAMENDMENT PRIOR TO SUCH APPROVAL BEING GRANTED.

TOGUT, SEGAL & SEGAL LLPOne Penn PlazaSuite 3335

New York, New York 10119(212) 594-5000Albert TogutScott E. RatnerScott A. GriffinSamantha J. Rothman

Counsel to the Debtor and Debtor in Possession

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK---------------------------------------------------------------X

:In re: : Chapter 11

:DEWEY & LEBOEUF LLP, : Case No. 12-12321 (MG)

:Debtor. :

:---------------------------------------------------------------X

DISCLOSURE STATEMENT RELATING TO

THE FIRST AMENDED CHAPTER 11 PLAN OF LIQUIDATIONOF DEWEY & LEBOEUF LLP, DATED NOVEMBER 21DECEMBER 31, 2012

12-12321-mg Doc 782-1 Filed 12/31/12 Entered 12/31/12 17:03:48 Blackline ofAmended Disclosure Statement Pg 1 of 115


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DISCLAIMER

THIS DISCLOSURE STATEMENT RELATES TO THE FIRST AMENDEDCHAPTER 11 PLAN OF LIQUIDATION OF DEWEY & LEBOEUF LLP (THEPLAN) AND HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125OF THE BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL RULES OFBANKRUPTCY PROCEDURE. THE DEBTOR IS THE PROPONENT OF THEPLAN. THE PLAN PROVIDES FOR THE PROPOSED METHOD OFLIQUIDATION OF THE ASSETS OF THE DEBTOR AND THE DISTRIBUTIONSCREDITORS OF THE DEBTOR WOULD RECEIVE IN THE CHAPTER 11 CASEUNDER THE PLAN.

THIS DISCLOSURE STATEMENT IS DESIGNED TO PROVIDEADEQUATE INFORMATION TO ENABLE HOLDERS OF ELIGIBLE CLAIMS TOMAKE AN INFORMED JUDGMENT ABOUT WHETHER TO ACCEPT OR REJECTTHE PLAN. ALL HOLDERS OF ELIGIBLE CLAIMS ARE ADVISED ANDENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN

THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.ALL SUMMARIES OF THE PLAN AND OTHER STATEMENTS CONTAINED INTHIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BYREFERENCE TO THE PLAN, THE EXHIBITS ANNEXED TO THE PLAN, AND THEEXHIBITS ANNEXED TO THIS DISCLOSURE STATEMENT. THESTATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADEONLY AS OF THE DATE HEREOF UNLESS OTHERWISE INDICATED, ANDTHERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINEDHEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED INACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND RULE

3016 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AND NOTNECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIESLAWS OR OTHER APPLICABLE LAW. THIS DISCLOSURE STATEMENT ANDTHE PLAN DESCRIBED HEREIN HAVE NOT BEEN REVIEWED BY THESECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORYAUTHORITY, NOR HAVE THEY APPROVED, DISAPPROVED OR PASSSEDUPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINEDIN THE PLAN OR HEREIN. ANY REPRESENTATION TO THE CONTRARY IS ACRIMINAL OFFENSE. PERSONS OR ENTITIES TRADING IN OR OTHERWISEPURCHASING, SELLING OR TRANSFERRING CLAIMS OF THE DEBTOR INTHIS BANKRUPTCY CASE SHOULD EVALUATE THIS DISCLOSURESTATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEYWERE PREPARED. NO PERSON MAY GIVE ANY INFORMATION ON BEHALFOF THE DEBTOR REGARDING THE PLAN OR THE SOLICITATION OFACCEPTANCES OF THE PLAN, OTHER THAN THE INFORMATIONCONTAINED IN THIS DISCLOSURE STATEMENT.

AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, ANDOTHER PENDING OR THREATENED LITIGATION OR ACTIONS, THISDISCLOSURE STATEMENT DOES NOT CONSTITUTE AND MAY NOT BE



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CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY,STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE INSETTLEMENT NEGOTIATIONS AND SHALL BE INADMISSIBLE FOR ANYPURPOSE ABSENT THE EXPRESS WRITTEN CONSENT OF THE DEBTOR ANDTHE PARTY AGAINST WHOM SUCH INFORMATION IS SOUGHT TO BEADMITTED.

THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENTIS INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OFTHE PLAN AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHERTHAN TO DETERMINE HOW TO VOTE ON THE PLAN. THE DESCRIPTIONSSET FORTH HEREIN OF THE ACTIONS, CONCLUSIONS, ORRECOMMENDATIONS OF THE DEBTOR, THE CREDITORS COMMITTEE, THESECURED LENDERS, OR ANY OTHER PARTY IN INTEREST HAVE BEENPASSED UPON BY SUCH PARTY, BUT NO SUCH PARTY MAKES ANYREPRESENTATION OR WARRANTY REGARDING SUCH DESCRIPTIONS.

THIS DISCLOSURE STATEMENT WILL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING INVOLVING THE DEBTOR OR ANY OTHERPARTY, NOR WILL IT BE CONSTRUED TO CONSTITUTE CONCLUSIVEADVICE ON THE TAX OR OTHER LEGAL EFFECTS OF THE DEBTORSLIQUIDATION AS TO HOLDERS OF CLAIMS AGAINST, OR INTERESTS IN,THE DEBTOR.



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TABLE OF CONTENTS

Page

I. INTRODUCTION...................................................................................................................1

A. Executive Summary..............................................................................................1

B. Considerations in Preparation of the Disclosure Statement and Plan;Disclaimers.............................................................................................................1

C. General ...................................................................................................................3

D. Solicitation Package..............................................................................................4

E. Voting Procedures, Ballots, and Voting Deadline...........................................4

II. EXPLANATION OF CHAPTER 11 ....................................................................................5

A. Overview of Chapter 11.......................................................................................5

B. The Plan of Liquidation .......................................................................................6

III. OVERVIEW OF THE PLAN...............................................................................................7A. Purpose of the Plan...............................................................................................7

B. Summary of Proposed Distributions Under the Plan .....................................7

IV. THE CONFIRMATION HEARING AND OBJECTION DEADLINE........................13

V. GENERAL INFORMATION REGARDING THE DEBTOR.........................................15

A. Background..........................................................................................................15

(i) The Debtors Pre-Petition Business ......................................................15

(ii) The Debtors Existing Capital Structure..............................................16

(iii) The Debtors Pre-Petition Pension Plans and 401(k) Plan ................17(iv) The Debtors Pre-Petition Malpractice Policies and Claims.............18

(v) Pending Pre-Petition Litigation ............................................................19

B. Events Leading Up to the Filing.......................................................................22

(i) Partner Defections...................................................................................22

(ii) Efforts to Save the Firm..........................................................................23

(iii) Criminal Investigation of the Firms Chairman .................................23

(iv) Wind Down of the Firms Offices Prior to Petition Date ..................24

VI. THE BANKRUPTCY CASE .............................................................................................25

A. Commencement of the Bankruptcy Case........................................................25

(i) First Day Motions ...................................................................................25

(ii) Filing of the Next Day Motions and Applications.........................26

(iii) Cash Collateral Usage ............................................................................28

(iv) Employee-Related Matters ....................................................................28



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(v) Rejection of Executory Contracts..........................................................29

(vi) Rejection of Non-Residential Real Property Leases andPersonal Property Leases.......................................................................29

B. Formation and Representation of the Statutory Committees.......................30

(i) The Creditors Committee .....................................................................30

(ii) The Former Partners Committee.........................................................30

(iii) The Motion to Disband the Former Partners Committee ................31

C. Other Significant Filings. ...................................................................................32

(i) Schedules of Assets and Liabilities, Statement ofFinancial Affairs......................................................................................32

(ii) Wind-Down of Certain of the Firms Foreign Officesafter the Petition Date.............................................................................32

(iii) De Minimis Asset Sales ...........................................................................34

(iv) Retention of Auctioneer and Sale of Artwork ....................................34

(v) Bar Date for Filing of Claims Arising Prior to thePetition Date ............................................................................................34

(vi) Pending Application to Establish AdministrativeClaims Bar Dates.....................................................................................35

(vii) Disposition of Client Files......................................................................35

D. Executory Contract and Unexpired Lease Charges.......................................36

E. Exclusivity Periods .............................................................................................36F. The PCP 9019 and Ad Hoc Committee Motion to Appoint a

Trustee or Examiner ...........................................................................................37

G. Alternative Dispute Resolution ........................................................................38

VII. PARTNER CONTRIBUTION PLAN; RELEASE AND INJUNCTION...................38

A. Partner Contribution Amounts Sought and Obtained..................................38

B. Compromise of Controversies ..........................................................................39

C. Releases ................................................................................................................39

D.

The Participating Partner Injunctions..............................................................40

E. Bar Order..............................................................................................................41

F. Secured Lender Releases of Participating Partners .......................................42

G. Wind-Down Committee Treatment .................................................................43

H. Covenants and Assignment of Claims.............................................................43

I. PCP Effective Date..............................................................................................43



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J. Payment................................................................................................................44



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K. Related Agreements ...........................................................................................44

(i) The Grimaldi PCP...................................................................................44

L. 1301 Objection to the PCP..................................................................................45

(i) The 1301 Lease and Related PCP Objection........................................45

M. Other Litigation Matters ....................................................................................46

(i) The Bunsow Litigation...........................................................................46

(ii) The Creditors Committees Motion to Obtain Standing toProsecute Mismanagement Claims......................................................47

N. Bennett Receivables Collection & Settlement .................................................47

VIII. THE CHAPTER 11 PLAN..............................................................................................48

A. General Description of the Treatment of Claims and Interests....................48

(i) Unclassified Claims ................................................................................48

(ii) Administrative Claims...........................................................................48

(iii) Priority Tax Claims.................................................................................49

(iv) Class 1 Non-Tax Priority Claims .......................................................49

(v) Class 2 Secured Lender Claims..........................................................50

(vi) Class 3 Other Secured Claims ............................................................51

(vii) Class 4 General Unsecured Claims ...................................................52

(viii) Class 5 Insured Malpractice Claims..................................................52

(ix) Class 6 Subordinated Claims .............................................................53

(x) Class 7 Interests....................................................................................54

B. Reservation of Rights Regarding Claims ........................................................54

C. Separate Classification of Certain Claims .......................................................54

(i) Secured Claims........................................................................................55

(ii) Insured Malpractice Claims ..................................................................55

IX. MEANS OF IMPLEMENTATION OF THE PLAN ......................................................55

A. Plan Funding Mechanism..................................................................................55

B. Secured Lender Trust .........................................................................................56

C. Liquidation Trust ................................................................................................58

D. Issuance of Liquidation Trustee and Secured Lender Interests...................61

(i) Issuance of Secured Lender Trust Interests ........................................61

(ii) Issuance of Liquidation Trust Interests ...............................................61



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E. Liquidation Trustee and Secured Lender Distributions ...............................62

(i) Distribution of Secured Lender Trust Assets......................................62

(ii) Distribution of Liquidation Trust Assets.............................................63

(iii) Distributions to Administrative, Priority andCertainOther Claims............................................................................................64

(iv) No Distributions from Litigation Recoveries to Defendants............66

F. Preservation of Causes of Action......................................................................66

G. Preservation of Records .....................................................................................67

H. General Disposition of Assets ...........................................................................67

I. Debtors Pre-Confirmation Period Operations...............................................67

J. Administrative Claims Bar Dates.....................................................................67K. Deadline for Filing Professional Fee Applications.........................................68

L. Execution of Documents to Effectuate Plan....................................................68

M. Authorization of Debtors Action.....................................................................68

N. Dissolution of Debtor .........................................................................................68

O. Post-Confirmation Reports and Fees ...............................................................69

P. Cancellation of Interests.....................................................................................69

Q. Statutory Committees.........................................................................................69

R. Insurance Preservation.......................................................................................69S. Substantial Consummation ...............................................................................69

T. Termination of the Pension Plans and 401(k) Plan ........................................69

U. Wind-Down Employees.....................................................................................70

V. Release of Collateral Agent and Administrative Agent................................70

X. DISTRIBUTION PROVISIONS .........................................................................................70

A. Plan Distribution.................................................................................................70

B. Timing of Distributions......................................................................................70

C. Address for Delivery of Distributions .............................................................71D. Distributions under Twenty-Five Dollars.......................................................71

E. Time Bar to Cash Payments ..............................................................................71

F. Unclaimed Distributions at Closing of Bankruptcy Case .............................71

G. Manner of Payments under the Plan ...............................................................72



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H. Expenses Incurred on or after the Effective Date and Claims of theLiquidation Trustee and Secured Lender Trustee .........................................72

Page

I. Setoffs and Recoupment ....................................................................................72

J. No Interest ...........................................................................................................72

K. Expungement or Adjustment to Paid, Satisfied or SupersededClaims and Interests ...........................................................................................73

XI. PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS............73

A. Objection Deadline .............................................................................................73

B. Prosecution of Disputed Claims and Voting on the Plan .............................73

C. Claims Settlement ...............................................................................................73

D. No Distributions Pending Allowance..............................................................74

E. Estimation of Claims ..........................................................................................74F. Limitations on Funding of Disputed Claims Reserve ...................................74

G. Tax Requirements for Income Generated by DisputedClaims Reserve....................................................................................................74

H. Assumption and Rejection of Executory Contracts andUnexpired Leases................................................................................................74

I. Cure.......................................................................................................................75

J. Claims Arising from Rejection, Expiration or Termination..........................76

XII. CONDITIONS PRECEDENT; CONFIRMATION AND EFFECTIVE DATE .........76

A. Conditions Precedent to Confirmation of the Plan........................................76

B. Conditions Precedent to the Effective Date ....................................................76

C. Waiver of Conditions Precedent.......................................................................77

D. Effect of Non-Occurrence of the Effective Date..............................................77

XIII. INJUNCTION; RELEASE; EXCULPATION .............................................................77

A. General Injunctions.............................................................................................77

B. Injunctions Against Interference with Consummation orImplementation of Plan .....................................................................................77

C. Injunction Against Prosecution of Causes of Action.....................................78D. Releases by the Debtor and its Estate ..............................................................78

E. Wind-Down Committee ....................................................................................78

F. All Distributions Received in Full and Final Satisfaction.............................79

G. No Modification of Res Judicata Effect............................................................79

H. Exculpation ..........................................................................................................79



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I. Governmental Carve-Out..................................................................................80

Page

XIV. CONFIRMATION OF PLAN REQUIREMENTS ....................................................80

A. Best Interest of Creditors Test; Liquidation Analysis...................................81

XV. PROCEDURES FOR VOTING ON PLAN....................................................................83

XVI. CONFIRMATION HEARING ......................................................................................84

XVII. SETTLEMENT AND COMPROMISES........................................................................85

A. Settlement of Secured Lenders Collateral Coverage ....................................85

(i) Issues Subject to Compromise ..............................................................86

(ii) Effect of Settlement.................................................................................86

(iii) Approval of Settlement..........................................................................86

(iv) Considerations Regarding the Chapter 11 Plan.................................86

(v) Description of Settlement and Compromise RegardingSecured Lenders Collateral Coverage.................................................87

(vi) The Settlement and Compromise is in the Best Interestsof the Estate and its Creditors...............................................................89

B. Proposed Settlement with Certain Partners of the DebtorsFormer Dubai Office...........................................................................................91

XVIII.RETENTION OF JURISDICTION BY BANKRUPTCY COURT..............................92

XIX. CERTAIN TAX CONSEQUENCES OF THE PLAN ..................................................93

A. General .................................................................................................................93

B. Tax Consequences of Payment of Allowed Claims Pursuant to PlanGenerally..............................................................................................................94

(i) Recognition of Gain or Loss ..................................................................94

(ii) Bad Debt or Worthless Securities Deduction......................................95

C. Treatment of the Secured Lender Trust, the Liquidation Trustand their Beneficial Owners ..............................................................................95

D. Information Reporting and Withholding........................................................96

E. Treatment of Holders of Interests.....................................................................96

XX. MISCELLANEOUS PROVISIONS...............................................................................100A. Payment of Statutory Fees...............................................................................100

B. Third Party Agreements; Subordination......................................................101

C. No Discharge .....................................................................................................101

D. Headings ............................................................................................................101

E. Governing Law..................................................................................................101



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F. Expedited Determination ................................................................................101

Page

G. Exemption from Transfer Taxes .....................................................................101

H. Exemption from Securities Laws....................................................................102

I. Notice of Entry of Confirmation.....................................................................102

IJ. Interest and Attorneys Fees............................................................................102

JK. Rates....................................................................................................................102

KL. Severability ........................................................................................................102

XXI. RECOMMENDATION.................................................................................................104



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TABLE OF ATTACHMENTS

EXHIBIT 1 First Amended Plan of Liquidation [FILED SEPARATELY]

EXHIBIT 2 Disclosure Statement Order [TO BE FILED]

EXHIBIT 3 Notice of Confirmation Hearing [TO BE FILED]

EXHIBIT 4 Participating Partners Schedule

EXHIBIT 5 Liquidation Analysis Schedule

I. INTRODUCTIONA. Executive SummaryDewey & LeBoeuf LLP, the debtor in this Chapter 11 bankruptcy case (the

Debtor or the Firm), filed its first amended Chapter 11 plan of liquidation with theBankruptcy Court on November __December 31, 2012 (the Plan). A copy of the Planis attached as Exhibit 1 to this Disclosure Statement. The Debtor is the proponent of thePlan and is now seeking the votes of certain Creditors in favor of the Plan. ThisDisclosure Statement contains information, including a description of the terms of thePlan, to enable Creditors to make an informed decision in voting on the Plan.

The Plan is a product of certain consensual discussions among the Debtor, theCreditors Committee, and certain of the Secured Lenders. The Debtor, the CreditorsCommittee, and Secured Lenders believe believes that the terms of the Plan are fair toall holders of Claims and Interests, taking into account the financial situation of theDebtor and the legal priority of such Claims and Interests. At this time, the Debtor doesnot believe that there is a viable alternative for completing the Bankruptcy Case otherthan through confirmation of the Plan. THE DEBTOR EXPECTS THAT THECREDITORS COMMITTEE, AND THE SECURED LENDERS HOLDING AMAJORITY IN AMOUNT OF THE SECURED LENDER CLAIMS WILL SUPPORTCONFIRMATION OF THE PLAN. THE DEBTOR RECOMMENDS THATCREDITORS VOTE TO APPROVE OR OTHERWISE SUPPORT THE PLAN.

B. Considerations in Preparation of the Disclosure Statement and Plan;Disclaimers

BECAUSE ACCEPTANCE OF THE PLAN WILL CONSTITUTE ACCEPTANCE

OF ALL THE PROVISIONS THEREOF, HOLDERS OF ELIGIBLE CLAIMS AREURGED TO CONSIDER CAREFULLY THE INFORMATION REGARDINGTREATMENT OF THEIR CLAIMS CONTAINED IN THIS DISCLOSURESTATEMENT.

THE CONFIRMATION AND EFFECTIVENESS OF THE PLAN ARE SUBJECTTO MATERIAL CONDITIONS PRECEDENT. SEE ARTICLE XII CONDITIONSPRECEDENT; CONFIRMATION AND EFFECTIVE DATE. THERE CAN BE NOASSURANCE THAT THOSE CONDITIONS WILL BE SATISFIED.



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THE DEBTOR PRESENTLY INTENDS TO SEEK TO CONSUMMATE THEPLAN AND TO CAUSE THE EFFECTIVE DATE TO OCCUR PROMPTLY AFTERCONFIRMATION OF THE PLAN. THERE CAN BE NO ASSURANCE, HOWEVER,AS TO WHEN AND WHETHER CONFIRMATION OF THE PLAN AND THEEFFECTIVE DATE ACTUALLY WILL OCCUR. PROCEDURES FORDISTRIBUTIONS UNDER THE PLAN, INCLUDING MATTERS THAT AREEXPECTED TO AFFECT THE TIMING OF THE RECEIPT OF DISTRIBUTIONS BYHOLDERS OF ALLOWED CLAIMS IN CERTAIN CLASSES AND THAT COULDAFFECT THE AMOUNT OF DISTRIBUTIONS ULTIMATELY RECEIVED BY SUCHHOLDERS, ARE DESCRIBED IN SECTION III.B OVERVIEW OF THE PLAN SUMMARY OF PROPOSED DISTRIBUTIONS UNDER THE PLAN. THE WIND-DOWN COMMITTEE AND THE DEBTORS CHIEF RESTRUCTURING OFFICERHAVE APPROVED THE PLAN AND RECOMMEND THAT THE HOLDERS OFELIGIBLE CLAIMS VOTE TO ACCEPT THE PLAN IN ACCORDANCE WITH THEVOTING INSTRUCTIONS SET FORTH IN ARTICLE XV P R O C E D U R E SF O R V O T I N G O N P L A N AND IN THE BALLOT. TO BE COUNTED,YOUR BALLOT MUST BE DULY COMPLETED, EXECUTED, AND ACTUALLY

RECEIVED BY THE VOTING DEADLINE. HOLDERS OF ELIGIBLE CLAIMS AREENCOURAGED TO READ AND CONSIDER CAREFULLY THIS ENTIREDISCLOSURE STATEMENT AND THE PLAN.

*****

THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAINPROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATEDTO THE PLAN, ANTICIPATED EVENTS IN THE BANKRUPTCY CASE, ANDFINANCIAL INFORMATION. ALTHOUGH THE DEBTOR BELIEVES THAT THESUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIEDTO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF THE

PLAN OR CERTAIN DOCUMENTS (AND HOLDERS OF ELIGIBLE CLAIMSSHOULD REFER TO THE PLAN AND SPECIFIED DOCUMENTS IN THEIRENTIRETY AS ATTACHED HERETO), STATUTORY PROVISIONS, EVENTS, ORINFORMATION. FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURESTATEMENT HAS BEEN PROVIDED BY THE DEBTOR, EXCEPT WHEREOTHERWISE SPECIFICALLY NOTED. THE DEBTOR IS UNABLE TO WARRANTOR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDINGTHE FINANCIAL INFORMATION, IS WITHOUT ANY INACCURACY OROMISSION.

IN DETERMINING WHETHER TO VOTE TO ACCEPT THE PLAN, HOLDERSOF ELIGIBLE CLAIMS MUST RELY UPON THEIR OWN EXAMINATION OFTHE DEBTOR AND THE TERMS OF THE PLAN, INCLUDING THEMERITS AND RISKS INVOLVED. THE CONTENTS OF THIS DISCLOSURESTATEMENT SHOULD NOT BE CONSTRUED AS PROVIDING ANY LEGAL,BUSINESS, FINANCIAL, OR TAX ADVICE. EACH SUCH HOLDER SHOULDCONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL, AND TAX ADVISORSWITH RESPECT TO ANY SUCH MATTERS CONCERNING THIS DISCLOSURESTATEMENT, THE SOLICITATION, THE PLAN AND THE TRANSACTIONSCONTEMPLATED THEREBY.



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EXCEPT AS SET FORTH HEREIN, NO PERSON HAS BEEN AUTHORIZEDBY THE DEBTOR IN CONNECTION WITH THE PLAN OR THE SOLICITATIONTO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHERTHAN AS CONTAINED IN THIS DISCLOSURE STATEMENT AND THE EXHIBITSATTACHED HERETO OR INCORPORATED BY REFERENCE OR REFERRED TOHEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONMAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEBTOR.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT AREMADE AS OF THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURESTATEMENT DOES NOT, UNDER ANY CIRCUMSTANCE, CREATE ANYIMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT ATANY TIME SUBSEQUENT TO THE DATE HEREOF. ANY ESTIMATES OF CLAIMSNOR INTERESTS SET FORTH IN THIS DISCLOSURE STATEMENT MAY VARYFROM THE AMOUNTS OF CLAIMS OR INTERESTS DETERMINED BY THEDEBTOR OR ULTIMATELY ALLOWED BY THE BANKRUPTCY COURT, AND ANESTIMATE, OF ANY KIND, SHALL NOT BE CONSTRUED AS AN ADMISSION.

C. GeneralThis Disclosure Statement has been prepared to comply with section 1125 of

the Bankruptcy Code and is hereby transmitted by the Debtor to holders of EligibleClaims for use in the solicitation of acceptances of the Plan, a copy of which is attachedhereto as Exhibit 1. Unless otherwise defined in this Disclosure Statement, capitalizedterms used herein have the meanings ascribed to them in the Plan. All exhibits attachedto this Disclosure Statement are incorporated as if fully set forth herein and are a part ofthis Disclosure Statement.

For purposes of this Disclosure Statement, the following rules of interpretation

shall apply: (i) whenever the words include, includes, or including are used,they shall be deemed to be followed by the words without limitation, (ii) thewords hereof, herein, hereby, and hereunder and words of similar importshall refer to this Disclosure Statement as a whole and not to any particular provision,(iii) article, section, and exhibit references are to this Disclosure Statement unlessotherwise specified, and (iv) with respect to any Distribution under the Plan, on adate means on or as soon as reasonably practicable thereafter.

The purpose of this Disclosure Statement is to provide adequate informationto entities who hold Eligible Claims to enable them to make an informed decisionbefore exercising their right to vote to accept or reject the Plan. By Order of theBankruptcy Court entered on _______, 2013, (the Disclosure Statement

Order)[Docket No.___], this Disclosure Statement was approved and held to containadequate information. A true and correct copy of the Disclosure Statement Order isattached hereto as Exhibit 2.

THE APPROVAL BY THE BANKRUPTCY COURT OF THIS DISCLOSURESTATEMENT DOES NOT CONSTITUTE AN ENDORSEMENT BY THEBANKRUPTCY COURT OF THE PLAN OR A GUARANTEE OF THEACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED



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HEREIN. THE MATERIAL CONTAINED HEREIN IS INTENDED SOLELY FORTHE USE OF HOLDERS OF ELIGIBLE CLAIMS IN EVALUATING THE PLANAND VOTING TO ACCEPT OR REJECT THE PLAN AND, ACCORDINGLY, MAYNOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN THEDETERMINATION OF HOW TO VOTE ON THE PLAN. THE PLAN ISSUBJECT TO NUMEROUS CONDITIONS AND VARIABLES AND THERE CANBE NO ABSOLUTE ASSURANCE THAT THE PLAN WILL BE EFFECTUATED ORTHAT THE PROJECTED RECOVERIES SET FORTH HEREIN WILL BE REALIZED.

D. Solicitation PackageAccompanying this Disclosure Statement for the purpose of soliciting votes on

the Plan are copies of (i) the Plan, (ii) the notice of, among other things, the time forsubmitting a ballot (the Ballot) to accept or reject the Plan, the date, time, and place ofthe hearing to consider the Confirmation of the Plan and related matters, and the timefor filing objections to the Confirmation of the Plan (the Confirmation HearingNotice), and (iii) a Ballot or Ballots (and return envelope(s)) that you may use in voting

to accept or to reject the Plan, or a notice of non-voting status, as applicable. If you didnot receive a Ballot and believe that you should have, please contact the SolicitationAgent (as defined below) at the address or telephone number set forth in the nextsubsection.

E. Voting Procedures, Ballots, and Voting DeadlineAfter carefully reviewing the Plan and this Disclosure Statement, and the

exhibits thereto, and the detailed instructions accompanying your Ballot, holders ofEligible Claims in Classes 2, 3, 4 and 5 should indicate their acceptance or rejection ofthe Plan by voting in favor of or against the Plan on the enclosed Ballot. Each suchholder should complete and sign his, her, or its Ballot and return it in the envelope

provided so that it is RECEIVED by the Voting Deadline (as defined below).

Each Ballot has been coded to reflect the Class of Claims it represents.Accordingly, in voting to accept or reject the Plan, you must use only the coded Ballotor Ballots sent to you with this Disclosure Statement.

If you have any questions about the procedure for voting your Eligible Claimwith respect to the packet of materials that you have received, please contact theSolicitation Agent (i) telephonically or (ii) in writing by (a) hand delivery, (b) overnightmail or (c) first class mail using the information below:

by hand delivery or overnight mail at:

Dewey & LeBoeuf LLP Ballot Processingc/o Epiq Bankruptcy Solutions, LLC757 Third Avenue, 3rd FloorNew York, NY 10017Telephone: (646) 282-2500



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by first class mail at:

Dewey & Leboeuf LLP Ballot Processingc/o Epiq Bankruptcy Solutions, LLC FDR StationP.O. Box 5014New York, NY 10150 5014Telephone: (646) 282-2500

THE SOLICITATION AGENT MUST RECEIVE THE ORIGINAL BALLOTON OR BEFORE 5:00 P.M., PREVAILING EASTERN TIME, ON [___________,2013](THE VOTING DEADLINE) AT THE APPLICABLE ADDRESS ABOVE.EXCEPT TO THE EXTENT ALLOWED BY THE BANKRUPTCY COURT, BALLOTSRECEIVED AFTER THE VOTING DEADLINE WILL NOT BE ACCEPTED ORUSED IN CONNECTION WITH THE DEBTORS REQUEST FORCONFIRMATION OF THE PLAN OR ANY MODIFICATION THEREOF.

The Debtor reserves the right to amend the Plan, subject to the consent of the

Creditors Committee, the Collateral Agent and Secured Lenders holding a majority inamount of the Secured Lender Claims. Amendments to the Plan that do not materiallyand adversely affect the treatment of Claims or Interests and are consistent with theterms of the Plan Support Agreement may be approved by the Bankruptcy Court at theConfirmation Hearing without the necessity of resoliciting votes. In the eventresolicitation is required, the Debtor will furnish new solicitation materials that willinclude new Ballots to be used to vote to accept or reject the Plan, as amended.

II. EXPLANATION OF CHAPTER 11A. Overview of Chapter 11Chapter 11 is the principal reorganization chapter of the Bankruptcy Code,pursuant to which a debtor may reorganize its business for the benefit of its creditors,

stockholders, and other parties in interest or engage in an orderly liquidation of itsbusiness. The Debtor commenced the Bankruptcy Case by filing a voluntary petitionfor relief under Chapter 11 of the Bankruptcy Code on May 28, 2012. The BankruptcyCase is being administered under Case No. 12-12321 (MG) by order of the BankruptcyCourt. See Section VI.A - The Bankruptcy Case - Commencement of the BankruptcyCase.

The commencement of a Chapter 11 case creates an estate of all the legal andequitable interests of the debtor in possession as of the date the petition is filed.Sections 1101, 1107, and 1108 of the Bankruptcy Code provide that a debtor may

continue to operate its business and continue in possession of its property as a debtor-in-possession unless the bankruptcy court orders the appointment of a trustee. In theBankruptcy Case, the Debtor has remained in possession of its property and is windingdown its business as a debtor in possession. See Article VI - The Bankruptcy Case.

Under section 362 of the Bankruptcy Code, the filing of a Chapter 11 petition,among other things, automatically stays all attempts by creditors or other third partiesto collect pre-petition claims from the debtor or otherwise interfere with its property or



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business. Exempted from the automatic stay are governmental authorities seeking toexercise regulatory or policing powers. Except as otherwise ordered by the bankruptcycourt, the automatic stay remains in full force and effect until the effective date of aconfirmed plan of reorganization. In the Bankruptcy Case, no Creditor or party ininterest has obtained relief from the automatic stay, except that certain of the Debtorsequipment lessors that were granted stay relief to retrieve certain of their property, acontract counterparty wascertain creditors were granted stay relief to set-off certain pre-petition amounts owing between the Debtor and that counterpartythose creditors, andan insurer was granted relief from the stay to permit it to advance certain defenseexpenses.1

The formulation of a Chapter 11 plan is the principal purpose of a Chapter 11case. The plan sets forth the means for satisfying the claims against and interests in thedebtors estate. Unless a trustee is appointed, only the debtor may file a plan during thefirst 120 days of a Chapter 11 case (the Filing Period). However, section 1121(d) ofthe Bankruptcy Code permits the bankruptcy court to extend or reduce the FilingPeriod upon a showing of cause. Following the filing of a plan, a debtor must solicit

acceptances of the plan within a certain time period (the Solicitation Period). TheSolicitation Period may also be extended or reduced by the bankruptcy court upon ashowing of cause. In the Bankruptcy Case, by Order dated September 21, 2012[Docket No. 500], the Debtors Exclusive Filing Period and the Debtors ExclusiveSolicitation Period were extended to, through and including, December 3, 2012, andMarch 1, 2013, respectively. See Section VI.E - The Bankruptcy Case - ExclusivityPeriods.

B. The Plan of LiquidationA Chapter 11 plan sets forth and governs the treatment and rights to be afforded

to creditors and interest holders with respect to their claims against, and interests in, the

debtor. According to section 1125 of the Bankruptcy Code, acceptances of a Chapter 11plan may be solicited by the debtor only after a written disclosure statement has beenprovided to each creditor or shareholder who is entitled to vote on the plan.

1 In conjunction with the rejection of certain the Debtors non-residential real property leases, theDebtors equipment lessors were granted stay relief to retrieve their property that the Debtor electednot to retain during the wind down pursuant to Orders of the Bankruptcy Court, dated July 26, 2012[Docket No. 238] and August 9, 2012 [Docket No. 332]. Additionally, the Debtor (a) consented to aseparate Order of the Bankruptcy Court [Docket No. 338] with Fifth Third Bank for stay relief and (b)entered into stipulations with ePlus Group, inc. [Docket No. 382], U.S. Bank National Association[Docket No. 290], Wells Fargo Equipment Finance, Inc. [Docket No. 370], Fidelity National Capital,Inc., d/b/a Winthrop Capital and Banc of America Leasing & Capital, LLC [Docket No. 460] as itapplied to payment for the Debtors continued use and future return of the equipment leased bythose parties. Additionally, XL Specialty Insurance Company (XL Specialty Insurance) wasgranted relief from the stay to permit it to advance certain defense expenses pursuant to the LawFirm Management Liability and Company Reimbursement Policy No. LU123088-11 for the Debtor forthe period from October 2, 2011 to October 2, 2012. [Docket No. 559]. The Debtor also entered into aStipulationseparate stipulations with GE Asset Management Incorporated (GEAM)and DellMarketing, L.P. granting GEAMthose entities relief from the automatic stay to set off mutualprepetition Claims and granting related relief. [Docket No.s. 565 and 720, respectively].



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The Debtors Plan is a plan of liquidation. In general, a Chapter 11 plan ofliquidation (i) divides claims and interests into separate classes, (ii) specifies theproperty that each Class is to receive under the plan, and (iii) contains other provisionsnecessary to implement the Plan. Under the Bankruptcy Code, claims and interestsare classified rather than creditors and, in this case, Partners, because such Personsor entities may hold claims and interests in more than one class.

III. OVERVIEW OF THE PLANA. Purpose of the PlanThe primary purpose of the Plan is to effectuate the completion of the orderly

wind down of the Debtors affairs. Pursuant to the Plan, the Debtor contemplates theliquidation of substantially all of its Assets and the Distribution of the related proceedsand the remainder of its Assets through two trust vehicles a Liquidation Trust andSecured Lender Trust established for the benefit of holders of Eligible Claimspursuant to the Plan and the Bankruptcy Codes priority scheme.

The Disclosure Statement sets forth certain detailed information regarding theDebtors history and significant events that occurred prior to, and during, theBankruptcy Case. The Disclosure Statement describes the Plan, effects of Confirmationand the manner in which Distributions will be made under the Plan. In addition, thisDisclosure Statement discusses the Confirmation process and voting procedures thatholders of Eligible Claims must follow for votes to be counted.

B. Summary of Proposed Distributions Under the PlanUnder the Plan, Claims against, and Interests in, the Debtor are divided into

seven (7) Classes. Certain Claims, including Administrative Claims and Priority Tax

Claims, are not classified and, if not paid prior, will receive payment in full in Cash onthe later of the Effective Date or the date such Claim is Allowed, or as otherwise agreedto by the holder of such Claim. All other Claims and Interests, to the extent Allowed,will receive the Distributions described in the table below.

The table below summarizes the classification and treatment of the pre-petitionClaims and Interests under the Plan. The summary is qualified in its entirety byreference to the provisions of the Plan and the estimates contained therein may besubject to change.



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Class Claim/Interest

Treatment ofClaim/Interest

EstimatedAggregateAmount of

Allowed Claimsor Interests

Proposed Treatmentof Allowed Claims

or Interests

EstimatedRecovery2

2 The estimated recoveries for each Class of Claim set forth below shall be filed with the BankruptcyCourt no later than seven (7) calendar days prior to the deadline to object to the Disclosure Statement.2 The range of estimated recoveries contained herein are based upon, inter alia, the assumedeffectuation of the PCPs, Receivables collection recoveries, asset disposition recoveries and thefavorable resolution of certain Claims and Causes of Action, with the low end of the range ofrecoveries representing projected recoveries assuming low-range asset value realization estimates ofthe Debtors Professionals. The actual recoveries may vary significantly from the range of estimatedrecoveries set forth herein.



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Class 1 Non-TaxPriorityClaims

Unimpaired $3.51.4 million Payment of suchClaimants Allowedamount in Cash orsuch othertreatment agreed toby the Claimantand the Debtor orthe LiquidationTrustee in writing.

______%100%

Class 2 SecuredLenderClaims

Impaired $261,897,943.72Secured Lender

Claims

$100,000,000.00

Secured LenderDeficiencyClaim

Payment of suchClaimants Pro Ratashare of the SecuredLender TrustInterests and the

Liquidation TrustSecured LenderInterests, allowanceof its SecuredLender Claim andallowance ofits ProRata share of theSecured LenderDeficiency Claims,which shallbeAllowed as, andreceive the same

treatment inaccordance with thetreatment affordedtoas, Class 4General UnsecuredClaims.

______%346.8% 76.7%4

3 These estimates assume that all holders of Secured Lender Claims are Releasing Secured Lenders (i.e.,Secured Lenders who, on their Ballots, have not opted out of the release of Participating Partners).

Under the Plan, Non-Releasing Secured Lenders (i.e., those Secured Lenders who, on their Ballots,opt out of the release of Participating Partners) are not entitled to receive proceeds from PCPs.

4 Class 2 - Secured Lender Claims estimated recoveries assume that all holders of Secured LenderClaims are Releasing Secured Lenders (i.e., Secured Lenders who, on their Ballots, have not opted outof the release of Participating Partners provided by Section 11.4 of the Plan). Under the Plan, Non-Releasing Secured Lenders (i.e., those Secured Lenders who, on their Ballots, opt out of the release of

(footnote continued on the following page)



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Participating Partners provided by Section 11.4 of the Plan) are not entitled to receive proceeds fromthe PCPs. Accordingly, the estimated recoveries for such Claim holders may vary from those ofReleasing Secured Lenders. In addition, the recovery estimates for Secured Lenders Claimscontained herein may be reduced if the amount of Allowed Administrative Claims exceeds theamount projected in the Budget.



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Class 3Other

SecuredClaimsClaim/ Interest

ImpairedTreatment of

Claim/Interest

N/AEstimatedAggregateAmount of


Cash in the amountof such AllowedOther SecuredClaim; or a non-recourseconveyance of theEstates right, titleand interest in andto the collateralsecuring suchAllowed OtherSecured Claim, orsuch othertreatment as agreedto by the Claimantand the Debtor orthe Liquidation

Trustee in writing.

Proposed Treatmentof Allowed Claims

or Interests

______%Estimated Recovery



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Class 43

GeneralUnsecuredClaimsOther Secured

Claims

Impaired N/A Payment of suchClaimants Pro Ratashare of theLiquidation TrustGeneral UnsecuredCreditor Interests.

Cash in the amountof such AllowedOther SecuredClaim; or a non-recourseconveyance of theEstates right, titleand interest in andto the collateralsecuring such

Allowed OtherSecured Claim, orsuch othertreatment as agreedto by the Claimantand the Debtor orthe LiquidationTrustee in writing.

______%100%5

Class 5

4

InsuredMalpractice Claims

GeneralUnsecured

Claims

Impaired N/A Payment solelyfrom the proceedsof any applicable

MalpracticePolicy.Payment ofsuch Claimants ProRata share of theLiquidation TrustGeneral UnsecuredCreditor Interests.

______%5.25% 14.1%6

5 Based upon its preliminary analysis of Claims raised as potential Class 3 Other Secured Claims, theDebtor believes Allowed Claim amounts for such Class will be $0.

6 The recovery estimates for Allowed General Unsecured Claims contained herein may be reduced ifthe amount of Allowed Administrative Claims exceeds the amount projected in the Budget.Additionally, under the Plan and as discussed further herein, Secured Lender Deficiency Claims arenot entitled to a Distribution from the Initial PCP/Unfinished Business Proceeds (a Distribution thatsuch holders would otherwise be entitled to as general Unsecured Creditors). Accordingly, the rangeof recoveries for holders of Secured Lender Deficiency Claims on account of such Claims will bebetween 1.8% and 9.6%. These estimates also assume that all holders of Secured Lender DeficiencyClaims are Releasing Secured Lenders (i.e., Secured Lenders who, on their Ballots, have not opted outof the release of Participating Partners provided by Section 11.4 of the Plan). Under the Plan, Non-

(footnote continued on the following page)



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Class 6Subordinate

d

ClaimsClaim/ Interest

ImpairedTreatment of

Claim/Interest

N/AEstimatedAggregateAmount of


No Distributionunder the Planunless all other

Classes are first paidin full.Proposed

Treatment ofAllowed Claims or

Interests

______%Estimated Recovery

Class 75

InterestsInsured

Malpractice Claims

Impaired N/A No Distributionunder the Plan.Payment solelyfrom the proceedsof any applicableMalpractice Policy.

______%100%7

Class 6 Subordinat

ed Claims

Impaired N/A No Distribution

under the Planunless all otherClasses are firstpaid in full.

0%

Class 7 Interests Impaired N/A No Distributionunder the Plan.

0%

IV. THE CONFIRMATION HEARING AND OBJECTION DEADLINETHE BANKRUPTCY COURT HAS SET ___________, 2013, AT 10:00 A.M.,

PREVAILING EASTERN TIME, AS THE DATE AND TIME FOR THE HEARINGON CONFIRMATION AND TO CONSIDER ANY OBJECTIONS TO THE PLAN.THE CONFIRMATION HEARING WILL BE HELD AT THE UNITED STATESBANKRUPTCY COURT, ONE BOWLING GREEN, COURTROOM 501, NEWYORK, NEW YORK 10004. THE DEBTOR WILL REQUEST THE PLAN BECONFIRMED AT THE CONFIRMATION HEARING.

THE BANKRUPTCY COURT HAS FURTHER FIXED ___________,2013, AT5:00 P.M., PREVAILING EASTERN TIME, AS THE DEADLINE (THE OBJECTION

Releasing Secured Lenders (i.e., those Secured Lenders who, on their Ballots, opt out of the release ofParticipating Partners provided in Section 11.4 of the Plan) are not entitled to receive proceeds fromPCPs. Accordingly, the estimated recoveries for such Claim holders may vary from those of otherholders of General Unsecured Claims including Releasing Secured Lenders.

7 Estimated recoveries for holders of Allowed Class 5 Insured Malpractice Claims will be paidpursuant to, and solely from the proceeds of, any applicable Malpractice Policy with respect to theInsured Portion of such Claims.



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DEADLINE) FOR FILING OBJECTIONS TO CONFIRMATION WITH THEBANKRUPTCY COURT. OBJECTIONS TO CONFIRMATION MUST BE SERVEDSO AS TO BE RECEIVED BY THE FOLLOWING PARTIES ON OR BEFORE THEOBJECTION DEADLINE:

Counsel to the Debtor:

Togut, Segal & Segal LLPAttn: Albert Togutand Scott E. RatnerOne Penn Plaza, Suite 3335New York, New York 10119

Counsel to the Creditors Committee:

Brown Rudnick LLPAttn: Edward S. Weisfelnerand Howard Steel7 Times SquareNew York, New York 10036



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Counsel to the Former PartnersCommittee:

Kasowitz Benson Torres & FriedmanLLPLLP Attn: David M. Friedman andJeffrey R. Gleit1633 BroadwayNew York, New York 10019

Counsel to the Administrative Agent andCollateral Agent:

Kramer Levin Naftalis & Frankel LLPAttn: Kenneth Eckstein, Robert Schmidt,and Daniel Eggermann1633 Broadway1177 Avenue of AmericasNew York, New York1001910036

Counsel to the Noteholders:

Bingham McCutchen LLPAttn: Michael J. Reilly and Ronald J.Silverman399 Park Avenue

New York, New York 10022

United States Trustee:

Office of the United States Trustee for theSouthern District of New YorkAttn: Brian Masumoto33 Whitehall Street, 21st Fl.

New York, New York 10004

ANY OBJECTION TO CONFIRMATION MUST BE IN WRITING AND (A)MUST STATE THE NAME AND ADDRESS OF THE OBJECTING PARTY ANDTHE AMOUNT OF ITS CLAIM OR THE NATURE OF ITS INTEREST AND (B)MUST STATE WITH PARTICULARITY THE NATURE OF ITS OBJECTION.ANY CONFIRMATION OBJECTION NOT TIMELY FILED AND SERVED AS SETFORTH HEREIN SHALL BE DEEMED WAIVED AND SHALL NOT BECONSIDERED BY THE BANKRUPTCY COURT.

V. GENERAL INFORMATION REGARDING THE DEBTORA. Background

(i) The Debtors Pre-Petition BusinessThe Firm is organized and registered as a New York limited liability partnership.

Its affairs are governed by the Partnership Agreement. The Firm was founded in 2007by the combination of two prominent law firms: Dewey Ballantine LLP and LeBoeuf,Lamb, Greene & MacRae LLP. Through this combination, the Firm became one of theworlds largest law firms, with over 1,300 attorneys in 12 countries and headquarters inNew York City (where it had its largest office of 545 lawyers). In addition to its New

York City office, the Firm had offices located in Abu Dhabi, Albany, Almaty, Beijing,Boston, Brussels, Chicago, Doha, Dubai, Frankfurt, Hong Kong, Houston,Johannesburg, London, Los Angeles, Madrid, Milan, Moscow, Paris, Riyadh, Rome,San Francisco, Sao Paulo, Silicon Valley, Tbilisi, Warsaw and Washington, D.C.



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(ii) The Debtors Existing Capital Structure(a) The Credit Agreement

On April 16, 2010, the Firm entered into the Credit Agreement with JPMorganChase Bank, N.A. (JPMorgan), as Administrative Agent; Citibank, N.A., as the

Documentation Agent; and Bank of America, N.A., as Syndication Agent on behalf ofthe lenders and issuing banks thereunder (collectively, the Credit AgreementLenders) pursuant to which the Credit Agreement Lenders provided the Firm with acredit facility consisting of revolving loans and letters of credit in an aggregate principalamount not to exceed $100 million.

(b) Secured NotesOn April 16, 2010, the Firm also entered into the Note Agreement pursuant to

which the Firm issued: (i) $40 million aggregate principal amount of 4.49% Series ASenior Secured Notes due April 16, 2013 (the Series A Notes); (ii) $15 millionaggregate principal amount of 5.39% Series B Senior Secured Notes due April 16, 2015(the Series B Notes); (iii) $40 million aggregate principal amount of 6.10% Series CSenior Secured Notes due April 16, 2017 (the Series C Notes); and (iv) $55 millionaggregate principal amount of 6.65% Series D Senior Secured Notes due April 16, 2020(the Series D Notes and, together with the Series A Notes, the Series B Notes and theSeries C Notes, the Secured Notes, and together with the Note Agreement and allother documents, including, without limitation, loan, note and security documentsrelated to, referenced in, or executed from time to time, in connection with the NoteAgreement, the Note Agreements).

(c) Secured Lender ClaimsAs of the Petition Date, the purportedasserted amount of obligations owing bythe Debtor under (i) the Credit Agreement wasinclude approximately $74,766,040.49 of

principal outstanding and $1,688,658.85 face amount of letters of credit issued andoutstanding under the Credit Agreementthereunder (the Credit AgreementObligations) and (ii) the Note Agreement wasinclude an aggregate outstandingprincipal amount of approximately $150 million (the Note Agreement Obligations,).In addition to the foregoing amounts, when certain other amounts are added, includingamounts owed by the Debtor under certain hedging agreements, prepetition interestand make-whole claims, the total pre-petition Secured Claims asserted against theDebtor by the Secured Lenders are approximately $261,897,943.72 (together with theCredit Agreement Obligations and the Note Agreement Obligations, the SecuredLender Claims).

(d) Other Pre-petition Obligations of the DebtorAs of the Petition Date, the Debtors other significant purported obligations

consisted of purported obligations to secured personal property lessors, landlords, andother Creditors.



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(iii) The Debtors Pre-Petition Pension Plans and 401(k) PlanThe Debtor was a contributing sponsor of the Dewey & LeBoeuf LLP Retirement

Plan, the Dewey & LeBoeuf Cash Balance Retirement Plan, and the Dewey & LeBoeuf2007 Partner Cash Balance Plan (each a Pension Plan, and collectively, the PensionPlans). Each Pension Plan is covered by title IV of the Employment Retirement IncomeSecurity Act of 1974, as amended (29 U.S.C. 1310 et seq.) (ERISA). The Debtor alsosponsored a 401(k) Plan for certain of its Partners and Employees, which it intends toterminate.

By Order of the U.S. District Court for the Southern District of New York, datedJune 13, 2012, the Pension Plans were terminated and the PBGC was appointedstatutory trustee of the Pension Plans. May 11, 2012 was established for each PensionPlan as the date of plan termination. The PBGC guarantees the payment of certainpension benefits upon termination of a pension plan covered by ERISA.

The PBGC contends that the Debtor and all members of the Pension Plans

controlled group, including non-debtors, are (a) jointly and severally liable for theunfunded benefit liabilities of the Pension Plans under 29 U.S.C. 1362(a); (b) obligatedto pay the contributions necessary to satisfy the minimum funding standards under26 26 U.S.C. 412(c)(11), and 29 29 U.S.C. 1082(c)(11); (c) jointly and severallyliable to the PBGC for unpaid premium obligations owed by the Debtor on account ofthe Pension Plans under 29 U.S.C. 1307; and (d) jointly and severally liable to thePBGC under 29 U.S.C. 1362(c) for shortfall and waiver amortization charges.

The PBGC has filed Claims (i) of $129 million (a portion of which seeksAdministrative Claim status) in the Bankruptcy Case for the alleged unfunded benefitliabilities; (ii) in an unliquidated amount that it estimates to be at least $8,558,750 forthe statutory premiums it alleges the Debtor owes to the PBGC; and (iii) in an

unliquidated amount for the alleged shortfall and waiver amortization charges.

The Debtor disputes each of the above PBGC contentions and intends to contesteach of the PBGCs Claims.

The Former Partners Committee has been informed by certain of theconstituents of the Former Partners Committee (the FPC Constituents) that theybelieve that they may hold Administrative Claims, arising from allegations that Cashwas removed from certain FPC Constituents 401(k) Plan accounts by the Debtor post-petititon.

The Debtor believes that certain of the FPC Constituents allegations that the

Debtor removed Cash from any of their 401(k) Plan accounts post-petition are meritlessand lack any basis in fact or law.

As set forth at length in the Debtors Opposition to (A) Motion of Ad HocCommittee of Retired Partners of LeBoeuf, Lamb, Leiby & MacRae for Appointment ofa Trustee or, in the Alternative, for the Appointment of An Examiner and (B) theStatement of the Official Committee of Former Partners for an Examiner [Docket No.393] (the Trustee Opposition) and the Declaration of Janis Meyer attached thereto (the



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Meyer Declaration), the Debtors Retirement and Investment Committee, acting asfiduciaries prior to the bankruptcy filing, appointed Gallagher Fiduciary Advisors, LLC(Gallagher) to be the fiduciaries of the 401(k) Plan and Benefit Plans AdministrativeServices, Inc. (BPAS) as administrators. See Meyer Decl., 21. Gallagher and BPAStook on these roles and, among other things, oversaw and are overseeing the Debtors401(k) Plan to ensure that the 401(k) Plans did not become disqualified, and to avoidpotential adverse tax consequences to all of the 401(k) Plans participants. See MeyerDecl., 21.

Gallagher and BPAS imposed a one-time 1% administrative charge on theaccounts of 401(k) Plan participants to pay the costs of administering the 401(k) Plans,including their fees and those of their counsel. See Meyer Decl., 19 - 22. Theseactions were solely taken for the benefit of 401(k) Plan beneficiaries. The Debtor did notremove Cash from any 401(k) Plan accounts. The Debtor has been advised that the U.S.Department of Labor is aware of the charge. See Meyer Decl., 22.

(iv) The Debtors Pre-Petition Malpractice Policies and ClaimsThe Debtor had a total of $275 million in professional indemnity coverage in

place for the policy year October 2011 to October 2012. The coverage consists of aprimary layer, which has a policy unit of $30 million, and six layers of excess coverage,in the amount of $20 million, $60 million, $40 million, $50 million, $25 million, and $50million, respectively. The risk on each layer of coverage is shared among multiplecarriers. The six excess policies adhere to the primary policy, whose terms andconditions apply to coverage throughout the entire $275 million in available coverage.Coverage for relevant earlier policy years ranged from $100 to $250 million.8

The Malpractice Policies9 indemnify the Firm and its affiliates and predecessors,as well as its attorneys, including Partners, of counsel, and Employees of the Firm for

Claims made against them during the Malpractice Policy period.

The Malpractice Policies cover assureds in their actions conducting business ofthe Firm in a professional capacity. Additionally, the Malpractice Policies coverassureds acting in a professional capacity generally, regardless of whether the businessis conducted in the name of the Firm, as long as the work inures to the benefit of theFirm or the work was pre-authorized by the Firm. Malpractice Policy exclusionsinclude: any Claim for which any assured had notice prior to the Malpractice Policyperiod; any Claim for which another insurance policy is primary; any Claim arising outof an act as a director or officer of any entity unless the assured was acting as lawyer forthe Firm; any Claims arising out of ERISA liability; any judgments for fraud or deceit oron-record admissions of guilt; any bodily injury; and any Claims for fines, penalties,

8 The professional indemnity coverage for the 2003-2004 policy year, which applies to certain pendingClaims against the Debtor, totaled $100 million prior to payment of certain Claims and defense costs.

9 In accordance with German law, the debtor also maintained a professional liability policy for itsFrankfurt office with a limit of $2 million per claim, 6 million in the aggregate, and a deductible of2,500 per Claim. This policy was purchased on a yearly basis and expired on October 1, 2012.



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punitive or exemplary damages. All of the Malpractice Policies are claims-madepolicies. (The Debtor has separate policy coverage relating to law firm management.)Under the terms of the Malpractice Policy, the Debtor is obligated to notify carriersrepresentatives of Claims that may implicate the Malpractice Policy upon learning ofsuch Claims. Any Claim arising from the same act or series of interrelated actsconstitutes one single Claim under the Malpractice Policies and the Malpractice Policylimits apply to the total amount of such Claims.

Under the Malpractice Policies the assured is obligated to pay certain self-insured retention payments before it will receive benefits. Once the initial self-insuredretentions are paid, benefits under the Malpractice Policy include reasonable costs,charges, and expenses, including attorneys fees, as well as judgments, settlements orother charges relating to the Claim, subject to on-going co-insurance retentionpayments. The self-insured retention payments include: (a) $2 million for each andevery Claim; (b) an additional annual aggregate retention amount of $2 million; and(c) a co-insurance retention amount, which is 6.67% of every dollar of the $30 million ofprimary coverage provided in connection with a Claim subject to Malpractice Policy

coverage. The excess Malpractice Policies do not require any SIR Amounts; theybecome available once the primary policy and/or preceding layer is exhausted.

As of the Bar Date, thirteen (13) Claims have been filed which could impact theDebtors Malpractice Policies. These Claims seek a total of $519 million. At this point,however, the Debtor, taking into consideration duplicate Claims, estimates that the totalamount of Insured Malpractice Claims is $225,779,222.31. These Claims have beenreported to the carriers, and some may have already been reported in earlierMalpractice Policy years. The Debtor disputes the validity of these Claims and intendsto contest each of these Claims. Allowed Malpractice Claims shall receive recoveriessolely out of proceeds of the Debtors Malpractice Policies with respect to the InsuredPortion of the Claim.

(v) Pending Pre-Petition LitigationAs of the Petition Date, there were thirteen (13) cases pending against the Debtor

as defendant. These included three (3) district court actions, six (6) state court actions,three (3) arbitration proceedings and administrative enforcement actions, and one(1) foreign action.

A. District Court Actionsa) ComUnity Collectors LLC, et al. v. Mortgage Electronic

Registration Services, Inc., et al., No. CV 11-4777 (N.D. Cal.).

In this litigation, the plaintiff ComUnity is suing multipledefendants including the Debtor, along with a Partner andassociate, for breach of fiduciary duty and conspiracy, withplaintiffs seeking damages of $30 million. This case wasdismissed on August 7, 2012, and has not been re-filed.

1. Vittoria Conn v. Dewey & LeBoeuf LLP, Case No. 12-CV-3732(S.D.N.Y). The plaintiff brought suit against the Debtor for



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alleged violations of the Worker Adjustment and RetrainingNotification Act (WARN Act). As described below,Vittoria Conn has filed a class action complaint in theBankruptcy Case for the same alleged violations of theWARN Act alleging that certain Employees were notprovided sixty (60) days advance written notice of theirterminations by the Firm, as required by the WARN Act, andninety (90) days advance written notice of their terminationsby the Firm, as required by the New York WorkerAdjustment and Retraining Notification Act.

1. Pension Benefit Guaranty Corporation v. Dewey & LeBoeuf LLP,12-CV-3833 (S.D.N.Y.). In this matter, the PBGC hascommenced suit against the Debtor in connection with thetermination of certain of its Pension Plans. This case hasbeen closed pursuant to a consent order dated June 13, 2012.

b)

Vittoria Conn v. Dewey & LeBoeuf LLP, Case No. 12-CV-3732(S.D.N.Y). On May 29, 2012, Vittoria Conn (the Plaintiff),a former employee, filed a Complaint against the Debtor onbehalf of herself, and a class of former employees that sheclaims to be similarly situated to her and who wereterminated on or about May 11, 2012, and within thirty (30)days of that date, alleging the Debtor violated the WorkerAdjustment and Retraining Notification Act of 1988, 29U.S.C. 2101-2109 et seq. (WARN Act), and various state-based counterparts. Specifically, the Complaint alleges theDebtor failed to provide Ms. Conn and the members of theputative class that she seeks to represent at least 60 days

advance notice of their terminations in accordance with theWARN Act. The Complaint seeks damages consisting of theamount of wages, holiday pay, vacation pay, sick leave payand the value of any other benefits, which would have beenearned and paid during the period for which noticepurportedly had not been sufficiently provided.

The Debtor denies the Claims and allegations contained inthe Complaint, none of which it believes have merit. OnDecember 7, 2012, Plaintiff filed a motion for classcertification, which has been noticed for hearing on February21, 2013. On December 14, 2012, the Debtor filed a motion todismiss the Complaint, which has been noticed for hearingon January 24, 2013. To the extent that the Complaint cannotbe resolved consensually and is not dismissed, the Debtor isprepared to vigorously defend itself against the action.

c) Pension Benefit Guaranty Corporation v. Dewey & LeBoeuf LLP,12-CV-3833 (S.D.N.Y.). In this matter, the PBGC commencedsuit against the Debtor in connection with the termination of



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certain of its Pension Plans. This case has been closedpursuant to a consent order dated June 13, 2012.

B. State Court Actionsa) Bluebird Express, LLC v. Dewey & LeBoeuf LLP, Case No.

14677/2012 (Sup. Ct. Nassau Cty.). In this litigation,Bluebird Express, LLC is suing the Debtor for breach ofcontract, seeking damages of $158,000.

b) Visualex LLC v. Dewey & LeBoeuf LLP, No. 0011412-2012(N.Y.C. Civ. Ct.). Visualex LLC brought suit against theDebtor for breach of contract.

c) Arnold v. Chenery Management, Inc., et al, Case No. 1099(Phila. County Ct. Comm. Pleas). In this matter Edward H.Arnold and Jeanne D. Arnold commenced a suit against theDebtor and a Partner and others for breach of fiduciary duty,misrepresentation and fraud.

d) ABM Janitorial Services v. Dewey & LeBoeuf, Case No.651645/2012 (N.Y. Sup. Ct.). ABM Janitorial Servicesbrought suit against the Debtor seeking damages of $299,000for failure to pay for services provided.

e) 1101 New York Holdings LLC v. Dewey LeBoeuf LLP, Case No.2012 LTB 011976 (D.C. Super.). One of the Debtorslandlords, 1101 New York Holdings LLC, commenced anaction against the Debtor based upon a failure to pay rent.

f) Diamond Personnel, LLC v. Dewey & LeBoeuf LLP, Case. No.651709/2012 (N.Y. Sup. Ct.). Diamond Personnel, LLCbrought suit against the Debtor seeking damages of$740,519.22 for failure to pay for services provided.

C. Arbitrations / Administrative Enforcement Actionsa) HMA Professional, Inc., et al. v. Dewey & LeBoeuf LLP and Dean

Hansell, Case No. 1220042429 (JAMS Arbitration LosAngeles). This arbitration relates to a suit by the plaintiffagainst the Debtor and a Partner for malpractice, breach of

fiduciary duty and misrepresentation. The plaintiff hasdismissed the complaint against the Debtor.

b) James Woods v. Dewey & LeBoeuf LLP. In this matter a formerPartner brought a Claim against the Debtor for unpaidcompensation, which is subject to arbitration under the NewYork City Bar Associations alternative dispute resolution



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rules pursuant to the Partnership Agreement. This case hasbeen stayed.

c) Aaron R. Hand v. Dewey & LeBoeuf LLP, Case No. 12-86647(State of California Office of the State Labor Commissioner).In this arbitration, a former associate seeks damages for anunpaid bonus.

D. Foreign Actionsa) Unicredit Bank AG v. Rajon Financial Enterprises GmbH, et al,

(Frankfurt District Court). The plaintiff brought suit againstthe Firm, certain Partners, and former clients of the Firmseeking a declaratory judgment that plaintiff is notresponsible for any amounts the German tax authorities maydisallow as tax deductions for the former client. The caseagainst the Firm has been stayed by the court in Frankfurt in

deference to the automatic stay in the Bankruptcy Case.B. Events Leading Up to the FilingAs noted above, the combination created a law firm designed to compete with

the largest mega-firms dominating the market until that time. The Firms plan was tocapitalize on its scope, expand its breadth of services, and attract top talent. Over thenext several years, the Firm continued to expand by hiring and promoting top talent,including new first-year associates, and by acquiring Partners and practice groups withsignificant books of business. With respect to the newly acquired Partners, the Firmcontemplated that these rainmakers would expand the client base of the Firm.

In connection with its expansion, by 2012, the Firm had entered intocompensation agreements with approximately 130 Partners for certain guaranteed andincentive payments. These compensation agreements were not generally disclosed tothe entirety of the Firms partners.

In 2008, the Firm missed its targeted profit by approximately $140 million. Asrecently as December 2011, the Firms profit was $30 million short of expectations forthe calendar year. Throughout this period, several Partners agreed to defer theircompensation. By April 2012, the inability of the Firm to meet certain conditions forborrowing and the impending expiration of the Firms line of credit used for workingcapital left the Firm unable to draw down further funds, which led to a liquidity crisisfor the Firm.

(i) Partner DefectionsAs noted above, the Firm was unable to make its target profit numbers as early

as 2008. Partners learned they would not receive their anticipated compensationamounts for 2008 and the Firm offered deferred bonuses to many Partners in amountsthat would make up for the shortfall in target compensation.



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Thereafter, the Firm was unable to earn its target profit for 2009, 2010 or 2011,and in each of those years, was unable to pay most Partners their target compensation.To further exacerbate matters, Partners learned that while certain Partners had notreceived their expected compensation, and had in some cases received deferredbonuses, others had received the full amount of their expected compensation. AsPartners learned about amounts other Partners received, Partner dissension increased.Also, the extent of the previously undisclosed compensation agreements and theseverity of the Firms liquidity crisis was made known to the partnership and Partnersbegan leaving the firm in early 2012. As practice groups of Partners departed, Firmmorale dwindled and Partner defections further increased.

(ii) Efforts to Save the FirmOn March 27, 2012, the Firm announced the creation of the Office of the

Chairman, which became effective on April 3, 2012. The first goal of the Office of theChairman was to attempt to preserve the Firm as a going concern. The Office of theChairman explored the possibility of a merger with another firm or firms. The Office of

the Chairman was also negotiating with many firms to acquire whole offices, groups ordepartments of the Firm, with or without assuming certain of the Firms obligations.However, those negotiations eventually failed based, allegedly, on the announcement ofthe criminal investigation (discussed below).

In conjunction with these goals, the Firm sought to renegotiate and extend itsCredit Agreement. Although the Firms Credit Agreement was set to mature on April16, 2012, it was extended to April 30, 2012, by agreement with the Credit AgreementLenders, and ultimately extended to May 18, 2012.

In late April 2012, an internal memo was circulated to Partners stating that theFirm recognized that such Partners fiduciary duties to their clients and Employees

warranted pursuing other employment opportunities for as many of the Firms lawyersand other personnel as possible. During May 2012, approximately 200 Partnersdeparted for other firms. That same month, the Firms litigation practice, historicallyone of the most profitable groups at the Firm, announced its departure. Shortlythereafter, the Firms bankruptcy practice, also one of the most profitable groups, left aswell. By the Petition Date, there were few active Partners with the Firm.

Merger or restructuring negotiations on various fronts eventually failed based,allegedly, on the announcement of the criminal investigation (discussed below).

(iii) Criminal Investigation of the Firms ChairmanOn or about April 27, 2012, the Office of the Chairman learned from press reports

that the Manhattan District Attorneys office was investigating allegations ofwrongdoing by Steven H. Davis, the Firms former Chairman and member of the newlyformed Office of the Chairman. On or about April 29, 2012, Mr. Davis was removedfrom all leadership roles within the Firm.



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(iv) Wind Down of the Firms Offices Prior to Petition DateUnder the direction of the Office of the Chairman, and in connection with the

wind down, almost all offices, departments, or practice groups moved to other firms.Many of the Firms non-legal and legal staff moved with the offices, departments, andgroups.

With respect to the Firms foreign offices, prior to the Petition Date, all of theFirms Partners had left the offices in Dubai, Tbilisi, Abu Dhabi, Madrid, Brussels,Frankfurt, Hong Kong, Beijing, and Johannesburg. The remaining Employees of thoseoffices were terminated and the offices were wound down and closed (or were in theprocess of closing, winding down, and/or liquidating in accordance with local law).The separate partnership of Dewey & LeBoeuf LLP, a limited liability partnershiporganized under the laws of England and Wales (DLUK), is in the process of windingdown its business in London and Paris, under the control of insolvency administratorsin England.

Prior to the Petition Date, the Firm sold its ownership interests in its practice inWarsaw for approximately $6 million, and its ownership interest in its active practicesin Russia and Kazakhstan (other than the representative offices) for approximately $4.15million.

Partners of the Firm resident in the Milan and Rome offices were also Partners inthe Firms local affiliate, Dewey & LeBoeuf Studio Legale, along with a number ofItalian lawyers as local partners who were not members of the Debtor. Dewey &LeBoeuf Studio Legale was an Italian professional partnership, an autonomous andseparate legal entity, and a separate Italian tax payer with its own VAT number. OnMay 19, 2012, the Partners in Dewey & LeBoeuf Studio Legale terminated therelationship of this affiliate with the Firm and resigned from the Firm. They began a

new practice of law on May 19, 2012, under the name of Grimaldi Studio Legale, whichtook over the Firms office space, assets, clients and personnel in Milan and Rome.

(a) Appointment of the Wind-Down Committeeand the Hiring of Restructuring Professionals

In conjunction with the Firms wind down efforts, the Office of the Chairmanrecommended to the Executive Committee of the Firm that it appoint a Wind-DownCommittee, and on May 11, 2012 the Executive Committee resolved to appoint theWind-Down Committee to oversee the Firms wind down.10 Ultimately, the Wind-10 The Wind-Down Committee is comprised of (a) Janis M. Meyer, Esq.; and (b) Stephen J. Horvath III,

Esq. Mr. Horvaths current compensation as a Wind-Down Committee member is $20,000 per week,through Confirmation, (with additional payment of $950 per hour to the extent he exceeds 52 hoursfor a two week period, which aggregate amount inclusive of his $20,000 per week compensation shallnot exceed $38,000 per week). Since the Petition Date, Mr. Horvath has been paid $985,872.00 incompensation by the Debtor. Ms. Meyers current compensation as a Wind-Down Committeemember is $19,000 per week through the Effective Date. Since the Petition Date, Ms. Meyer has beenpaid $461,507.00 in compensation.



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Down Committee resolved to file the Bankruptcy Case. To advise the Firm inconnection with the Bankruptcy Case, the Firm hired (i) Togut, Segal & Segal LLP (theTogut Firm), as bankruptcy counsel to the Firm, and (ii) Goldin Associates, LLC, afirm that regularly serves as a court-appointed fiduciary and which has significant lawfirm bankruptcy experience. In addition, the Wind-Down Committee determined toretain Jonathan A. Mitchell, a senior managing director of Zolfo Cooper, LLC (ZolfoCooper), to serve as the Firms Chief Restructuring Officer (the CRO) and otherprofessionals of Zol