EJS Holdings, a privately held investment company that owned Chesapeake Energy bonds, has filed a proposed class action suit against former U.S. Bankruptcy Chief Judge David Jones and former Jackson Walker bankruptcy partner Elizabeth Freeman for not disclosing their relationship and claims the law firms Jackson Walker and Kirkland & Ellis also hid the relationship.
Jones and Freeman’s romantic relationship turned into a scandal for the Houston bankruptcy court.
In March 2021, Freeman confirmed a prior relationship with Jones but denied a current relationship. A year later, Freeman admitted the relationship was active after a Jackson Walker partner confronted her.
In December 2022, Freeman left Jackson Walker to start her own firm, and in October 2023, Jones resigned from the bench shortly after former Fifth Circuit Chief Judge Priscilla Richman announced the court was looking into allegations against Jones.
According to the lawsuit, the couple was living together in a million-dollar-plus home they jointly owned.
“Never once across more than thirty mega-bankruptcies did they disclose the relationship even though the law demanded it,” the lawsuit read. “Why? Because doing so would have meant disqualification in all cases — costing millions in professional fees and tarnishing reputations.”
The 90-page complaint filed in the Southern District of Texas last week seeks a jury trial and $2 million in damages.
EJS Holdings alleges breach of fiduciary duty, aiding and abetting, and unjust enrichment against all defendants. It further alleges common law fraud and common law civil conspiracy against Jones, Freeman, Kirkland and Jackson Walker.
Along with suing Jones, Freeman, Kirkland and Jackson Walker, ESJ Holdings is suing Brown Rudnick, the law firm that represented Chesapeake’s creditor committee in the bankruptcy proceedings.
EJS Holdings stated in the complaint that it owned more than $150 million in mostly unsecured bonds from Chesapeake. Kirkland and Jackson Walker represented the company in its Chapter 11 bankruptcy proceedings, which it filed in June 2020. Jones presided over the reorganization, and the company came out of bankruptcy in 2021.
The investment company alleges Jackson Walker and Kirkland learned of the relationship in March 2021, and communications between Jackson Walker attorneys show knowledge of the relationship and efforts to cover it up.
“The firm maintains Freeman indicated her intimate relationship with Jones was in the past, that it ended ‘prior to March 2020’ and that they ‘each own their own homes’ and ‘do not and have not lived together,’” the lawsuit reads. “Jackson Walker then consulted outside ethics counsel and instructed Freeman to stop working and billing on any case assigned to Jones.”
Kirkland called the lawsuit “meritless” in a statement to The Texas Lawbook.
“As Kirkland has repeatedly made clear, and as the U.S. Trustee’s proceeding against Jackson Walker has demonstrated, the firm and its lawyers had no knowledge of the relationship between Judge Jones and Ms. Freeman until it became public in October 2023,” the statement reads.
U.S. District Judge Andrew Hanen is presiding over the case.
Mikell West of Bandas Law Firm is representing EJS Holdings. He did not immediately respond to a request for comment.
Counsel for all defendants had not filed appearances as of Tuesday.
West is also representing the GWG bondholders in their suit against Jones, Freeman, Jackson Walker and Porter Hedges.
The case number is 4:26-00334.
Note: This story has been updated with comment from Kirkland.