Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, August 18. In today's briefing, the Justice Department's bankruptcy division is seeking to block Texas law firm Jackson Walker from settling with its former clients, arguing that these deals could interfere with a federal trial over the firm's alleged failure to disclose a romantic relationship between a former partner and a bankruptcy judge. And in Sunnova Energy's bankruptcy, Enterprise Bank & Trust is challenging the court's approval of the solar financier's assets, saying that the deal failed to disclose potential tax liabilities and could jeopardize its investment in solar tax credits.

The Justice Department's bankruptcy division urged a federal judge to reject settlements between Texas law firm Jackson Walker and its former bankruptcy clients in order to make way for a government trial on its handling of an ex-partner's romantic relationship with former judge David R. Jones.

The Justice Department's Office of the U.S. Trustee on Friday objected to settlements reached between Jackson Walker and several former chapter 11 clients surrounding the firm's failure to disclose the romantic relationship between Jones and his long-time romantic partner, bankruptcy lawyer Elizabeth Freeman.

The private deals could "short circuit" the U.S. Trustee's own case against Jackson Walker, government lawyers wrote in a court filing. The U.S. Trustee also said that its approach was the better option than "unnecessary piecemeal litigation" involving Jackson Walker's ex-clients.

Freeman worked as a Jackson Walker partner on major chapter 11 cases overseen or mediated by Jones without any disclosure they were romantically involved. The U.S. Trustee is seeking to claw back some $23 million in fees that Jackson Walker earned in those cases. The firm has said it behaved appropriately.

U.S. District Judge Alia Moses has previously indicated she would set the case against Jackson Walker for trial after mediated talks with the U.S. Trustee didn't result in a settlement. —Andrew Scurria

• Earlier: Texas law firm Jackson Walker didn’t reach a deal ahead of a court-imposed deadline to resolve a civil case brought by the Justice Department over an ex-partner’s romantic relationship with the nation’s former top bankruptcy judge.

A bank lending to bankrupt Sunnova Energy is asking a bankruptcy court to review the sale approval to protect its financial interests. Enterprise Bank & Trust is urging the court to reconsider the approved sale of Sunnova’s assets, alleging a critical failure to disclose potential tax implications. In a recent filing, the bank said the sale includes assets from nonbankrupt entities and could trigger the recapture of millions in federal solar investment tax credits. Enterprise, which purchased over $32 million of these tax credits from Sunnova in 2023 and 2024, argued that it wasn’t adequately informed of the risks. The tax credits are subject to a five-year recapture period, and the bank maintains that the asset sale could jeopardize its investment. 
—Jodi Xu Klein

Beyond Meat on Friday pushed back against news reports that the plant-based food company is headed for chapter 11 bankruptcy, calling the claims “unequivocally false.”

The denial came after several publications reported that the company was struggling with a heavy debt load, falling sales and dwindling cash reserves.

Beyond Meat has been facing increased competition and a slowdown in the once-hot plant-based meat sector.

The company has recently taken steps to cut costs, including layoffs. Despite the challenges, Beyond Meat insists that it hasn't filed for bankruptcy and has no plans to do so.

Beyond Meat was once a Wall Street darling, with a market cap of as much as $10 billion. The company earlier this month said it has brought in AlixPartners to help improve its operations. —Jodi Xu Klein

The New York City office market is recovering from its pandemic debacle faster than any other in the U.S. Nothing speaks more to the turnaround than the gleaming new office tower built for JPMorgan Chase.

After more than six years of development, the bank is preparing to move thousands of employees into its new, 2.5-million-square-foot headquarters at 270 Park Ave. later this month before its October grand opening. The 60-story building is a roughly $3 billion bet that New York is definitively back after years of uncertainty about whether it would maintain its leadership in business and finance.

Investors' risk appetite for China's distressed developers has risen, HSBC analysts say in a research note. "Some investors have gone down the quality ladder and are pondering opportunities in the distressed universe" on potential turnaround and debt restructuring progress, analysts say. However, HSBC is mindful of potential risks tied to mandatory convertible bonds as a major component of debt restructuring proposals, as the bonds could lead to significant share dilution. HSBC likes China Resources Land and C&D International Investment Group. The analysts say that further catalysts, such as a possible margin recovery in the coming 1H results and any acquisition of prime land sites, would drive a rerating. —Sherry Qin

The cost of euro junk bond default protection declines to its lowest level since January 2022 as risk appetite dominates global markets. Prospects of the U.S. Federal Reserve cutting interest rates in September and expectations of a favorable outcome from the meeting between the U.S. and the Russian President on Friday are fuelling market optimism. "European markets are gaining traction ahead a of a key meeting between Trump and Putin in Alaska, raising hopes of a potential end to the [Ukraine-Russia] war," Rostro's Joshua Mahony says in a note. The iTraxx Europe Crossover index, which tracks euro junk bond credit default swaps, declines 2 basis points to 259bps, S&P Global Market Intelligence data show. —Miriam Mukuru

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