Top US bankruptcy judge resigns amid ethics inquiry

By Dietrich Knauth and Nate Raymond

(Reuters) – U.S. chapter Choose David Jones in Houston has resigned after a federal appeals court docket opened an ethics probe spurred by a beforehand undisclosed romantic relationship with an legal professional whose agency had instances earlier than his court docket, ending his tenure because the busiest chapter choose within the U.S.

Chief U.S. District Choose Randy Crane of the Southern District of Texas instructed Reuters on Sunday that Jones resigned, efficient Nov. 15. Jones had already stepped again from overseeing giant chapter instances and started reassigning them to 2 different judges on the court docket.

Neither Jones nor his courtroom deputy instantly responded to requests for remark.

The New Orleans-based fifth U.S. Circuit Court docket of Appeals issued a proper misconduct criticism towards Jones on Friday, after the choose revealed he has been in a years-long romantic relationship and shared a house with chapter legal professional Elizabeth Freeman. Till December 2022, Freeman had been a companion at Jackson Walker, an area legislation agency that filed many instances in Jones’ Houston courthouse.

The fifth Circuit stated Jones had stored details about his private relationship from two different judges who oversaw an effort to recuse him from a dispute involving bankrupt power firm McDermott Worldwide.

Ethics consultants have stated the undisclosed relationship casts doubt on the integrity of Jones’ court docket. The misconduct criticism has already led to a name for additional evaluate within the case of Tehum Care Providers, a bankrupt affiliate of jail healthcare firm Corizon, and will result in related challenges in different instances during which Freeman or Jackson Walker have been concerned.

Jackson Walker declined to touch upon the resignation, however resisted any suggestion their work might be up for additional evaluate. “From the time we first discovered of this allegation Ms. Freeman was instructed to not work or invoice on any instances earlier than Choose Jones. We’re assured that we acted responsibly,” the agency stated in a press release.

Freeman didn’t instantly reply to requests for remark.

The workplace of the U.S. Trustee, which serves because the Division of Justice’s chapter watchdog, stated on Friday that Tehum’s restructuring shouldn’t be authorized given new questions in regards to the “propriety” of Jones’ position within the case. Jones served as mediator throughout chapter negotiations during which Freeman additionally took half.

Jones has been essentially the most energetic chapter choose within the U.S. since January 2016, overseeing 11% of all Chapter 11 bankruptcies involving greater than $100 million in liabilities, in keeping with information from Debtwire, which supplies analysis and intelligence on credit score markets.

(Further reporting by Shubhendu Deshmukh in Bengaluru; Enhancing by Invoice Berkrot and Alexia Garamfalvi)

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