Some hedge-fund investors are seeking to profit by snapping up the debts of beleaguered law firm Dewey & LeBoeuf LLP, which may soon shut its doors and owes more than $200 million to banks, bondholders and vendors, the Wall Street Journal reported today. Investors in recent days say that there has been a flurry of activity, with brokers showing Dewey's debt to potential buyers. As of the beginning of this year, Dewey was owed about $320 million on accounts receivables and works in progress by Dewey attorneys, according to two investors who studied the claims. In the case of a bankruptcy or dissolution, a trustee would likely seek to claw back compensation awarded to the firm's partners in anticipation of services they have yet to perform, said one of the investors. There are at least $125 million of Dewey bonds, and portions of those were trading at between 50 cents and 65 cents on the dollar over the past two weeks as hedge funds bought them from the insurance companies that initially purchased the debt in 2010, according to traders and investors.
