Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Thursday, July 17. In today's briefing, Texas law firm Jackson Walker is one step closer to a government trial over its role in the Houston ethics scandal. Linqto is facing a challenge to its choice of bankruptcy venue. And Steward Health Care won court approval for its contested liquidation plan.

Jackson Walker doesn't reach deal in ethics case. Texas law firm Jackson Walker is headed toward a trial against government lawyers who accuse it of covering up what it knew about an ex-partner's undisclosed romance with the nation's former top bankruptcy judge.

Jackson Walker and the Justice Department’s Office of the U.S. Trustee concluded mediated talks without resolving litigation around the firm’s involvement in the ethics scandal that forced former bankruptcy judge David R. Jones off the bench in 2023, according to court papers filed Tuesday.

U.S. District Judge Alia Moses had previously indicated she would set a trial date if no settlement was reached in private mediation by Tuesday. The two parties could still reach a deal outside of the mediation process.

Jackson Walker never disclosed the romantic relationship between Jones and his longtime romantic partner Elizabeth Freeman, who worked as a partner in the firm’s bankruptcy practice from 2018 to 2022. The firm has maintained it acted appropriately.

A trial in U.S. Trustee's case, which seeks to disgorge $23 million in fees that Jackson Walker collected, is expected to spotlight the close ties between its attorneys and the former judge, as well as its popularity as local counsel to larger firms that brought their bankruptcy clients to Houston.

Linqto investor alleges company manufactured Texas venue. An equity holder of bankrupt investing platform Linqto alleged that its chapter 11 case was improperly steered to Houston in what amounts to “venue manipulation.”

Linqto described itself in bankruptcy papers filed last week as a Delaware corporation with a principal place of business in San Jose, Calif., and a mailing address in nearby Sunnyvale.

In April, the company also registered a corporate entity, Linqto Texas, with the Texas secretary of state’s office. That Texas entity filed a bankruptcy petition in the U.S. Bankruptcy Court in Houston, which gave the Linqto parent company a basis to file its own chapter 11 case there as well, court papers show.

Linqto shareholder Sapien Group said in a filing Wednesday that the Texas entity was “created for the apparent purpose of manufacturing and manipulating venue before this court.”

Steward Health Care approved to sue insiders under wind-down plan. A bankruptcy judge gave Steward Health Care System the go-ahead to wind down what remains of the company, marking the closure of one of the biggest hospital bankruptcies in decades.

U.S. Bankruptcy Judge Christopher Lopez overruled objections from creditors that the wind-down plan relies too heavily on the uncertain outcome of a planned litigation campaign to raise the money needed to pay Steward’s essential bills.

• Under the liquidation plan, top lenders to Steward are providing $127 million in financing to bankroll lawsuits against insiders, counterparties and former business partners of Steward. While much of the proceeds from those lawsuits would go to repay the lenders themselves, Steward’s lawyers argued that the surplus collected over time would help make whole creditors with administrative priority.

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