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U.S. Judge Pulls Jones Scandal Cases From Bankruptcy Court

By Andrew Scurria

 

Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Friday, April 11. In today's briefing, a federal judge pulled cases involving former bankruptcy judge David R. Jones from the Houston court where he once presided. Elsewhere, At Home Group is nearing a bankruptcy filing, Prospect Medical is preparing to shut down its Pennsylvania hospitals and more law firms are cutting deals with the Trump administration.

 

Top News

David J. Phillip/Associated Press

U.S. judge seizes control of bankruptcy scandal cases from Houston court. A federal district judge took control of lawsuits pending in the Houston bankruptcy court surrounding the ethics scandal that forced its former chief bankruptcy judge, David R. Jones, to resign from the bench.

Chief Judge Alia Moses of the Western District of Texas withdrew from bankruptcy court the Justice Department's civil case against Jackson Walker, the law firm where Jones’s long-term romantic partner Elizabeth Freeman worked for years on cases he oversaw without any disclosure of their relationship.

  • The Justice Department’s Office of the U.S. Trustee had requested that Moses withdraw its case against Jackson Walker from bankruptcy court to avoid an appearance of impropriety. The government case had previously been overseen by Judge Eduardo Rodriguez, Jones’s successor as the chief bankruptcy judge in Houston.

“The need to re-establish public trust and confidence in the court system alone impels withdrawal in this highly unusual case.”

— Chief Judge Alia Moses of the Western District of Texas
 
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Distress

Victor J. Blue/Bloomberg News

At Home Group, stung by trade war, explores bankruptcy. At Home Group is exploring a potential bankruptcy filing as the home-furnishings chain continues to struggle with generating sufficient earnings to meet its debt obligations, according to people familiar with the matter.

The Plano, Texas-based company is also evaluating other debt restructuring options as an alternative to bankruptcy, the people said. At Home is negotiating with landlords and creditors about how to restructure roughly $2 billion of debt, they said.

  • The business, which sources much of its products from abroad, is facing added pressure after the Trump administration introduced 10% baseline tariffs on most imported goods and hiked the tariff rate on products imported from China to 145%.
 

Bankruptcy

Photo: Butch Comegys/Associated Press

Prospect Medical prepares for shutdown of Pennsylvania hospitals. Prospect Medical Holdings will start transitioning some services currently provided by its two hospitals in Pennsylvania to other nearby medical providers in preparation for a full shutdown of the facilities the company has been threatening for months.

William Curtin, a lawyer for Prospect, said in bankruptcy court Thursday the company will start to transition certain hospital services provided by Crozer-Chester Medical Center and Taylor Hospital, including obstetrics and gynecology, to other providers in the area, as it continues to try to hammer out a sale that has been in the works for months with an unnamed buyer.

 

Law

Kevin Wurm/Reuters

Latham, Kirkland, Simpson Thacher near deals with White House. The firms are nearing agreements with the Trump administration akin to what others have reached that would require the firms to commit tens of millions of dollars worth of pro-bono legal services.

 

Economy

Spencer Platt/Getty Images

When does a market dive hit the rest of the economy? Stock declines can be a signal of future trouble in the economy, though not always a reliable one. Sometimes the market swoons and a recession ensues, while other times stocks can enter a bear market but the economy soldiers on.

 

Executive Insights

Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.

Just how much of that car was made in America? Advertisers making “Made in the USA” claims face greater risks—and opportunities—as Trump tariffs rock the global economy.

Public officials may separate their workplace and personal online lives, but hackers don’t care.

WeightWatchers is preparing to file for bankruptcy as part of a plan to hand control of the business to its creditors.

Nestlé-owned Coffee Mate had one response to “The White Lotus” season finale: “Well this is awkward.”

 

About Us

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Soma Biswas; Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Andrew Scurria; Becky Yerak. 

Follow us on Twitter: @SomaBisWSJ; @gladstonea; @jodixu; @AskAkiko; @AndrewScurria; @beckyyerak.

 
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