Dewey & LeBoeuf files for Chapter 11 bankruptcy

US law firm Dewey & LeBoeuf has filed for Chapter 11 bankruptcy.

The New York-based firm's demise came after a turbulent period of disappointing profits and heavy debts which forced it to slash partner salaries, The New York Times wrote.

Despite being hit hard by the 2008 financial crisis, it continued to offer multimillion-dollar guarantees to top partners and prospective employees that it could not afford.

"The full extent of the partner compensation arrangements is subject of continuing investigation," said Joff Mitchell, its chief restructuring officer, according to the BBC.

After its chairman was ousted, almost all its partners quit — two-thirds by the end of May, according to the Wall Street Journal — and creditors began suing for unpaid bills, Bloomberg wrote.

Dewey listed debt of $245 million and assets of $193 million in a Chapter 11 filing Monday in U.S. Bankruptcy Court in Manhattan.

It owed about $315 million to a list of more than 5,000 creditors, including secured lenders, landlords, vendors and employees, the WSJ reported, citing legal experts as saying that lawsuits would follow. 

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The firm was among the largest law firms in New York City and the largest US firms in London, with more than 1,300 attorneys in 12 countries after the 2007 merger of Dewey Ballantine and LeBoeuf, Lamb, Greene & McRae. 

After several weeks in what the WSJ called "write-down mode," it had reportedly reduced its workforce to a "skeleton crew" of 150.

Dewey would be liquidated, Jonathan A. Mitchell, the firm's restructuring officer said in the filing.

It will close offices in Hong Kong, Beijing, Sao Paulo, London, Paris, Madrid, Frankfurt and Johannesburg, while all US offices have been closed or are closing, Bloomberg reported.

The firm is recovering equipment and artwork and securing client's records, according to the filing.