About four months after the U.S. Trustee and Jackson Walker informed the court they had reached a deal that would resolve the federal bankruptcy watchdog’s objections to nine settlements totaling about $4.7 million, the judge overseeing the case has recommended the settlements be approved.
Chief U.S. Bankruptcy Judge Eduardo V. Rodriguez wrote that the settlement agreements “do not limit, restrict or otherwise affect any court’s authority or obligation to adjudicate the vacatur motions.”
“Jackson Walker may seek to introduce any settlement agreement into evidence in connection with the trial of the vacatur motions, and the U.S. Trustee reserves the right to object to the admission of any such settlement agreement,” he wrote. “Nothing herein requires or prohibits any court from considering a Settlement Agreement in adjudicating the relief sought by the U.S. Trustee in the vacatur motions.”
Chief Judge Rodriguez noted that, if approved, the settlements will represent the return of about $4.78 million of the $10.79 million the firm was awarded in the nine bankruptcy proceedings, which would give the beneficiaries of those estates an approximate 44 percent recovery.
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During a three-day evidentiary hearing in March, a major point of discussion was the impact these settlements would have on the U.S. Trustee’s efforts to vacate more than $20 million in fees awarded to the firm in 34 cases involving former Houston bankruptcy judge David Jones and former Jackson Walker bankruptcy partner Elizabeth Freeman.
The U.S. Trustee got involved in the litigation after the once-private romantic relationship between Jones and Freeman was publicly reported, which also led to Jones’ resignation from the bench. Leading up to the hearing in March, and at its outset, the trustee had characterized the settlements as an attempt to end-run its vacatur efforts.
Jackson Walker maintained the settlements between two private parties, the firm and certain individual clients, have no bearing on the actions of the trustee and its pursuit of relief under Rule 60(b) motions and no bearing on the inherent authority of the court.
On the third day of that hearing, after urging from Chief Judge Rodriguez, the U.S. Trustee and lawyers for Jackson Walker reached an agreement on the settlement language that allayed the concerns.
Jackson Walker is represented by Jason Boland, Julie Harrison, William R. Greendyke and Maria Mokrzycka of Norton Rose Fulbright, and Rusty Hardin and Emily Smith of Rusty Hardin & Associates.
The U.S. Trustee is represented by Laura Steele, Millie Sall, Joel Charboneau and Vianey Garza of the Department of Justice.
The court has set a non-evidentiary hearing scheduling conference in the case to take place Aug. 4.
The case number is 4:23-cv-04787.
