12-12321 Doc 10-1 Filed 05/28/12 Entered 05/28/12 22:42:23 Pleading Declaration of Jonathan A.

Mitchell In Support of Debtors Motion Pg 1 of 6

TOGUT, SEGAL & SEGAL LLP One Penn Plaza Suite 3335 New York, New York 10119 (212) 594-5000 Albert Togut Scott E. Ratner Brian F. Moore Proposed 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-

DECLARATION OF JONATHAN A. MITCHELL IN SUPPORT OF DEBTORS MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS PURSUANT TO 11 U.S.C. 105, 361, 362, 363 AND 507, RULES 2002, 4001 AND 9014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE ORDER (1) AUTHORIZING USE OF CASH COLLATERAL, (2) GRANTING ADEQUATE PROTECTION, (3) MODIFYING THE AUTOMATIC STAY, AND (4) SCHEDULING A FINAL HEARING Under 28 U.S.C. 1746, I, Jonathan A. Mitchell declare as follows under penalty of perjury: 1. I am the Chief Restructuring Officer of Dewey & LeBoeuf LLP

(DL, also referred to herein as the Firm or the Debtor), a New York registered limited liability partnership. 2. I am a senior managing director of Zolfo Cooper Management, LLC

(Zolfo Cooper). Zolfo Cooper has been retained to advise the Debtor on its winddown.

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3.

I am familiar with the day-to-day operations, business, and

financial affairs of the Debtor. I submit this declaration (the Declaration) in support of the Cash Collateral Motion.1 Except as otherwise noted, I have personal knowledge of the matters set forth herein. 4. After extensive efforts to engage in a strategic transaction with a

third party that would have preserved the core of DL as an operating law firm, DL determined to file for Chapter 11 protection to facilitate the wind down of its business and affairs. 5. The Debtor has reached an agreement with the Collateral Agent

and the Prepetition Secured Lenders for the consensual use of Cash Collateral to pay various ongoing expenses to facilitate the wind-down, including the funding of employee payroll, insurance, file storage, and rent, as well as the investigation, analysis and either prosecution or defense (as the case may be) of claims asserted by or against the Debtors estate, in accordance with an agreed upon Budget. Paying these expenses is critical for the Debtor to continue to successfully wind down its business and affairs and to maximize the value of the Debtors assets for all creditors. 6. The Debtors Prepetition Secured Lenders are the only creditors

known by the Debtor to have an interest in the Cash Collateral, and they have consented to the use of Cash Collateral in accordance with the terms of the proposed Interim Order and the Budget. 7. As of the Petition Date, the estimated amount of Prepetition

Obligations owing by the Debtor under (i) the Revolver Documents was approximately $74,766,040.49 of principal and $1,688,658.85 face amount of letters of credit issued and
1

Unless otherwise defined herein, capitalized terms shall have the meaning ascribed in the Cash Collateral Motion.

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outstanding under the Revolver Agreement (together with any amounts paid, incurred or accrued prior to the Petition Date in accordance with the Revolver Documents, plus, without limitation accrued and unpaid interest, any fees, expenses, and disbursements (including, without limitation, attorneys fees, consultant fees, related expenses and disbursements), indemnification obligations, secured hedging, letter of credit reimbursement obligations, letter of credit fees, secured cash management obligations and other charges or amounts of whatever nature, whether or not contingent, whenever arising, as each of the foregoing is provided in the Revolver Documents and (ii) the Note Documents was an aggregate principal amount of approximately $150,000,000, (together with any amounts paid, incurred or accrued prior to the Petition Date in accordance with the Prepetition Credit Documents, plus, without limitation, accrued and unpaid interest, any fees, expenses, and disbursements (including, without limitation, attorneys fees, consultant fees, related expenses and disbursements), makewhole obligations, indemnification obligations, and other charges or amounts of whatever nature, whether or not contingent, whenever arising, as each of the foregoing is provided in the Prepetition Credit Documents). 8. There are no alternative financing options available to facilitate the

administration of the Chapter 11 estate and continue the orderly wind-down of the Debtors affairs, including: (a) liquidation of the Firms assets, including approximately $255 million in face amount of accounts receivable and work in progress generated by DLs U.S. offices and various pieces of artwork; (b) disposition of the Firms former clients files; (c) closure of the Debtors offices and the return of leased property through the rejection of office and equipment leases; (d) evaluation and administration of claims against the Debtors estate; (e) investigation and pursuit of potential estate claims and causes of action; and (f) confirmation of a Chapter 11 plan. 3

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9.

The Debtors minimum cash needs are reflected in the weekly

Budget of budget of receipts and disbursements, prepared on a cash basis for five weeks. 10. Under the Budget, which was prepared in consultation with the

Debtors professionals, the Debtor estimates it currently has available approximately $6 million in cash on hand. The Budget anticipates approximately $13.4 million in disbursements during the first twenty-one (21) days, as well as additional bankruptcyrelated costs (including professionals) of $2.6 million, as well as additional reserves. 11. The Budget is narrowly tailored and reflects the reasonable,

necessary costs and expenses, including the costs attendant to the Chapter 11 case, to wind down the Debtors affairs. Access to its cash with the consent of Prepetition Secured Lenders will enable the Debtor to implement an orderly wind-down to maximize recoveries to creditors. Without immediate access to cash, the Debtors estate and its stakeholders will suffer substantial, immediate and irreparable harm. The Debtors need for access to the Cash Collateral is urgent. 12. I am advised by DLs advisors that the adequate protection

package is reasonable, necessary and appropriate to preserve and protect against the diminution in value of the Prepetition Collateral and the Prepetition Secured Lenders interests therein. As a practical matter, without use of the Cash Collateral, DL has no available means of preserving its records, protecting employee entitlements to accrued benefits, protecting remaining client documents, and administering its estate. The use of Cash Collateral prescribed in the Budget to facilitate the wind-down of the Debtors business and liquidate its assets in an orderly fashion will help to preserve value for all interested stakeholders. Also, the proposed granting of liens on avoidance actions and the proceeds therefrom is warranted because there is no additional collateral or other 4

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unencumbered assets of the estate available to protect the Prepetition Secured Lenders against any Diminution in Value. Therefore, the grant of liens on all avoidance actions is the only adequate protection available. As such, the terms and conditions of the use of Cash Collateral are fair and reasonable and were negotiated by the parties in good faith and at arms length. The Debtor has determined, therefore, that seeking the use of Cash Collateral is an exercise of its reasonable business judgment. 13. Efficient and expeditious approval to utilize Cash Collateral is in

the best interest of i t s creditors and other parties in interest. Given the immediate and irreparable harm to be suffered by the Debtor absent interim relief, I believe the Debtor should be authorized to use Cash Collateral.

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I declare under the penalty of perjury that the foregoing is true and correct. Executed on May 28, 2012 in New York, New York

/s/Jonathan A. Mitchell Jonathan A. Mitchell