One of the nation’s top bankruptcy judges will drop hundreds of corporate reorganization cases while he is being investigated by the federal appeals court over allegations that he failed to properly disclose a relationship.
(Bloomberg) — One of the nation’s top bankruptcy judges will drop hundreds of corporate reorganization cases while he is being investigated by the federal appeals court over allegations that he failed to properly disclose a relationship.
Houston Bankruptcy Judge David R. Jones has come under fire in recent days for failing to disclose that his girlfriend was a bankruptcy attorney at a prominent Texas law firm with business before his court.
The US Court of Appeals that oversees federal judges in Houston told him that he was being investigated and asked him to step aside from handling any big, corporate bankruptcy cases, Jones said during a court hearing Friday morning.
“I have been the subject of a fair amount of media attention over the past week,” Jones told lawyers in one of the many complex reorganization cases he oversees. “That media attention has prompted an investigation by the Fifth Circuit.”
A disgruntled shareholder in one of Jones’ 1,100 corporate cases filed a lawsuit with details about the relationship, according to court documents. The shareholder, Michael Van Deelen had earlier lost an appeal of a key bankruptcy ruling made by Jones that caused equity owners in a company to be wiped out.
For the last several years, Jones has been one of the premier bankruptcy judges in the US, issuing rulings in various multibillion dollar reorganization cases. The bankruptcy court in Houston has attracted many of the biggest insolvency cases in recent memory, and is one of the three main locations where corporations go to try to fix their debt problems.
Jones, who had at least one trial scheduled to start Monday, is handing his case load to two other judges in Houston who handle complex reorganizations, Marvin Isgur and Chris Lopez.
The order from the Texas court was released as the National Conference of Bankruptcy Judges — an annual get-together for lawyers and judges alike — was held nearby in Austin. Judge Jones has risen to prominence in the insolvency universe since the pandemic’s onset, as major cases started to land under his jurisdiction.
Word of the order whipped around the conference Friday morning as judges and lawyers caught up between panels. Attendees spoke in hushed tones about the situation. When approached by Bloomberg News, several bankruptcy judges at the conference declined to comment on the matter.
–With assistance from Amelia Pollard, Jeremy Hill and Erin Hudson.
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