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Bankruptcy

Secret Courthouse Romance, Ethics Investigations, Tens of Millions in Legal Fees: The SDTX Bankruptcy Scandal One Year Later

Houston Bankruptcy Judge David Jones’ voice was filled with emotion one year ago today in an interview with The Texas Lawbook. “I don’t know. I don’t know. I don’t know what is going to happen next. I just don’t know. I guess I have to resign.”

The Fifth Circuit had just published notice that it was investigating possible misconduct by Judge Jones over allegations that he had been involved in a multiyear secret romance with a former bankruptcy partner at Jackson Walker. The firm had been paid more than $20 million — fees often approved by Judge Jones — for its role in dozens of high-profile bankruptcies in which Jones served as judge or mediator. Jones officially resigned Oct. 15, 2023. The 365 days since have been pure chaos in the Houston bankruptcy courts, which is one of the three busiest courts in the nation for business bankruptcies.

“The whole thing is a mess, a complete fiasco,” said former UNT Dallas law dean Royal Furgeson. In a first-ever detailed timeline of the events of the past year and several years prior, The Lawbook documents a scandal about romance, secrecy, tens of millions of dollars in legal fees and ethical lapses that have engulfed the bankruptcy courts in Houston.

SDTX Bankruptcy Court Scandal Timeline

2011: David Jones leaves Houston law firm Porter Hedges after 19 years as a corporate bankruptcy lawyer to become a bankruptcy judge in the Southern District of Texas. Jones later hires

J&J Bankruptcy to Stay in Texas

U.S. Bankruptcy Judge Christopher Lopez said Thursday that he is keeping a Johnson & Johnson-related bankruptcy in Texas and not transferring the case back to New Jersey where J&J is headquartered.

Bankruptcy Chief Rodriguez Mulls JW’s Bid to Depose U.S. Trustee Epstein

During a hearing Tuesday, Chief U.S. Bankruptcy Judge Eduardo V. Rodriguez gave Jackson Walker and the U.S. trustee’s office until Oct. 15 to provide the court with further briefing on whether the depositions of the current and former U.S. trustee for Region 7 and a current trial attorney in that office should take place. He promised to rule quickly on the matter after the briefing is filed and said that for each day after Oct. 16, if he doesn’t file an order, he will be extending discovery deadlines by one day. Discovery is slated to close Nov. 1.

Jackson Walker Bankruptcy Fee Cases Reassigned After Judge Isgur’s Recusal

In the week since U.S. Bankruptcy Judge Marvin Isgur recused himself from all disputes involving Jackson Walker and the U.S. Trustee — related to the firm’s failure to disclose a former bankruptcy partner had a romantic relationship with a sitting bankruptcy judge — they have been officially reassigned to other bankruptcy judges sitting in the Southern District of Texas, court records show.

Houston Bankruptcy Judge Lopez’s Highly Complex, Big-Dollar Docket

Few Texas courtrooms are as busy as Houston Bankruptcy Judge Christopher Lopez’s. His docket of more than 380 business bankruptcies, plus a couple thousand personal and consumer bankruptcies, includes some of the highest profile and bitterly disputed corporate restructurings currently pending in the U.S., including J&J’s controversial $10 billion Chapter 11 Texas Two-Step restructuring under the subsidiary Red River Talc, and conspiracy theorist Alex Jones’ Info Wars media company. Judge Lopez is, by all accounts, establishing himself as one of the premier jurists for the most complex restructurings. But there are things lawyers should know when handling cases before Judge Lopez.

Kirkland, Bracewell Advise Vertex Energy in Bankruptcy

Houston-based energy transition products provider Vertex Energy Operating filed for Chapter 11 bankruptcy protection Tuesday in the Southern District of Texas citing $500 million to $1 billion in financial liabilities. Vertex Energy General Counsel James Gregory hired Kirkland & Ellis and Bracewell as its legal advisors in the restructuring. The case has been assigned to Houston Bankruptcy Judge Christopher Lopez.

Led by Jones Day and Porter Hedges, J&J Brings Texas Two-Step to Houston

Johnson & Johnson, hoping the third time’s a charm for solving its multibillion-dollar talc baby powder litigation fiasco, filed for Chapter 11 bankruptcy Friday for its Red River Talc subsidiary in Houston. The case featuring the highly controversial Texas Two-Step procedure has been assigned to Southern District of Texas Bankruptcy Judge Christopher Lopez. Two Texas lawyers expected to play key roles for the debtors in the case are Jones Day partner Gregory Gordon of Dallas and Porter Hedges partner John Higgins of Houston.

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