By Peg Brickley
- Reuters
Dewey & LeBoeuf LLP could be on track to make legal history if ex-partners get their way in a fight over a proposed $ 165,000 bonus for finance chief Frank Canellas.
In court papers, the ex-partners say Canellas is an insider of the blown-up law firm and must prove he has a “bona fide job offer from another business at the same or greater rate of compensation” to justify his bonus in bankruptcy. That’s what the law says, anyway.
If Canellas is forced to show he’s got a better job than his position as top money man, it could be on of the rare times, if not the first, that a proof requirement that’s been in place for nearly seven years is actually applied in a major case.
Lawyers for the official committee of former partners did not respond Friday when asked if they had ever heard of a bankruptcy court making an executive produce his offer letter from another employer before approving a bonus.
Maybe in states where big company bankruptcy is not a major industry, where all they know about the Bankruptcy Code is what is says in the statute, an executive has actually had to show a court his offer letter from another employer to get his bonus. But in Delaware and New York, lawyers and judges prepared in advance to get around the bonus restrictions. While Congress wrote the bonus law in black letters, top bankruptcy practitioners read the white lines to locate the “ordinary course” detour and the “incentive” superhighway.