A Texas bankruptcy judge approved McKinsey & Co.’s settlement with Justice Department watchdogs over how the firm discloses potential conflicts of interest, effectively ending a legal battle on transparency in the U.S. bankruptcy system.
Under the settlement, announced earlier this month, McKinsey agreed to walk away from about $8 million in fees for work it did helping navigate Westmoreland Coal Co. through a 2018 chapter 11 filing.
McKinsey didn’t admit to any wrongdoing but agreed to broaden the scope of disclosures made in future cases, including the names of confidential clients and potential conflicts involving its many affiliates. In return, the Justice Department agreed to drop an objection it filed in the Westmoreland case alleging McKinsey’s disclosures were legally insufficient.
The settlement is the latest in several multimillion-dollar deals in recent years tied to questions about McKinsey’s disclosure practices. Bankruptcy advisers legally are required to be disinterested and to disclose connections that could give rise to a conflict of interest.
“It is my hope that McKinsey management is able to implement changes that make a difference,” said Judge David Jones of the U.S. Bankruptcy Court in Houston, who oversaw the Westmoreland case and related disclosure litigation.
