In a legal twist that shook the foundations of the bankruptcy realm, ex-Houston bankruptcy judge David Jones is striving to dismiss a lawsuit that laid bare his romantic entanglement with a bankruptcy attorney, subsequently leading to his abrupt resignation. Jones, a heavyweight in overseeing major Chapter 11 cases, argues that he is shielded from personal lawsuits stemming from his judicial decisions.
Jones, presiding over the intricate case panel in the Southern District of Texas and holding the title of the busiest bankruptcy judge in the U.S., declared his resignation in October after publicly acknowledging a longstanding romantic involvement with Elizabeth Freeman. Freeman, formerly a bankruptcy partner at Jackson Walker until December 2022, represented numerous companies facing bankruptcy in Jones’ Houston court, often serving as local counsel for prominent law firms like Kirkland & Ellis.
This revelation unfolded in the wake of a lawsuit filed on October 4 by a McDermott International shareholder, Michael Van Deelen, alleging that Jones violated his rights by approving a bankruptcy plan that eradicated existing equity shares in the company. Van Deelen contended that Jones exhibited bias favoring McDermott, a company represented by Jackson Walker.
Jones, representing himself, filed a motion on December 29 seeking the dismissal of the lawsuit, citing judicial immunity as a protective shield against personal legal actions related to his court rulings. He argued that Van Deelen’s claims of unfair treatment should be addressed through an appeal of the McDermott bankruptcy ruling, an appeal Van Deelen is currently pursuing. Jones dismissed the separate lawsuit against him as an “inappropriate collateral attack” on the ongoing appeals process.
Notably, Jones’ resignation caused a seismic shift in the corporate bankruptcy landscape, leading to the reassignment of 3,500 cases and sparking inquiries into his handling of cases involving Jackson Walker. The U.S. Department of Justice’s bankruptcy watchdog is now pushing for the law firm to return millions of dollars in fees earned from cases presided over by Jones.
As the legal saga unfolds, questions loom over the implications of Jones’ actions and the potential fallout for the law firm Jackson Walker, which has chosen to remain tight-lipped on the matter. The case, Van Deelen v. Jones, continues to unravel in the U.S. District Court for the Southern District of Texas, bearing the weight of a scandal that has left the bankruptcy world in a state of uncertainty.
