Free Speech, Due Process and Trial by Jury
U.S. District Judge Lee Rosenthal is recommending closing a proceeding that was initiated to determine whether Jackson Walker should face any disciplinary action for its failure to disclose a romantic relationship between its former bankruptcy partner and a sitting bankruptcy judge. The order came about four months after the case was randomly assigned to her court.
On Thursday, the U.S. Trustee and Jackson Walker filed dueling motions to strike, with the law firm arguing the expert opinions of Richard J. Davis and Jonathan C. Lipson — a retired partner at Weil, Gotshal & Manges who now is in private practice, and a tenured bankruptcy law professor at Temple University-Beasley School of Law, respectively — and the U.S. Trustee arguing the same about an expert opinion from Renee Jefferson, who is the Larry Doherty Chair in Legal Ethics at the University of Houston Law Center.
The 18-page lawsuit seeking to claw back about $1.1 million in bankruptcy fees, along with other damages, was filed Tuesday in the bankruptcy court for the Southern District of Texas, Corpus Christi Division and brings claims for disgorgement for failure to make bankruptcy disclosures, breach of fiduciary duty and negligence.
Lawyers at Jackson Walker never told lawyers at Kirkland & Ellis that one of its bankruptcy partners was having a secret romantic relationship with former Houston Bankruptcy Judge David Jones and that Kirkland would have taken action to make the couple’s cohabitation public if he had known about it, one of Kirkland’s top bankruptcy lawyers told the U.S. Trustee’s office in a recent deposition.
For the fifth consecutive year, Texas led the nation in business bankruptcy filings, cementing its position as the premier destination for corporate restructurings. However, Delaware closed the gap significantly in 2024, surpassing Texas’ Southern District as the top venue for business bankruptcies.
Despite a tumultuous year marked by scandal in the Southern District, Texas' three other federal court districts experienced significant increases in bankruptcy filings, ensuring the state maintained its dominance in this critical legal sector. The Northern District, in particular, emerged as a rising star, with its Chapter 11 caseload more than doubling.
The Texas Lawbook's Mark Curriden has the details on these trends and more.
The corporate bankruptcy practice faced some headwinds in 2024, including higher interest rates, an unsettled political environment and the judicial romance scandal that rocked the complex bankruptcy panel in the Southern District of Texas.
The Texas Lawbook talked with Haynes Boone corporate bankruptcy and restructuring partner Ian Peck about trends in the world of complex business Chapter 11s in Texas.
On Saturday, retailer Party City voluntarily filed for its second Chapter 11 bankruptcy in under two years in the Southern District of Texas. Following the filing and after being in business for nearly 40 years, it will officially look to close its business. As it begins to take the necessary steps to do so, it has selected New York's Paul, Weiss, Rifkind, Wharton & Garrison as its legal counsel and Houston's Porter Hedges as local counsel.
The Container Store, a Coppell-headquartered retailer specializing in home organizing solutions, filed for Chapter 11 bankruptcy protection late Sunday in the Southern District of Texas, seeking to restructure its debt and address operating losses. Container Store CLO Tasha Grinnell hired Latham & Watkins and Hunton Andrews Kurth as legal advisors. The ad hoc committee of lenders is represented by Paul Hastings.
Two law professors recently shared their thoughts in interviews with The Texas Lawbook on what defenses Jackson Walker is likely to raise in litigation where the U.S. Trustee is attempting to claw back millions in fees awarded to the firm in cases where David Jones served as a mediator or judge. Jones resigned his bench last year after a secret romantic relationship with a former Jackson Walker bankruptcy professor came to light.
In its bankruptcy petition, Kal Freight cites between $100 million and $500 million in liabilities and provides the same range for its assets. Houston lawyer Benjamin Lawrence Wallen of Pachulski Stang Ziehl & Jones along with lawyers from the firm’s New York and California offices are listed as Kal Freight's lead legal advisors.
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