We’ve previously covered the pending lawsuit by Jay Alix against McKinsey here. It’s next level and totally worth refreshing your recollection. You’ll recall the sequence of events: first, a Wall Street Journal article highlighted McKinsey’s failure to disclose potential conflicts in a variety of restructuring engagements and then Jay Alix immediately launched his lawsuit alleging racketeering, bribery, etc. Curious timing, as we said at the time. We wrote:
Okay, this WSJ article is bananas. What are the chances that Jay Alix has a direct line in to Gerard Baker?
Given that the WSJ piece is now front in center in the “Complaint and Jury Demand” filed by Jay Alix in Alix v. McKinsey & Co. Inc., et al (page 4, paragraph 11), wethinks the chances are pretttttttty prettttttty high (we’re 100% speculating here so take this with the usual PETITION grain of salt).
Well, for McKinsey, the hits just keep on coming.
Subsequent to the above, the Wall Street Journal reported that a McKinsey retirement fund held investments that hinged on the result of some of the very bankruptcy cases that McKinsey RTS worked on. WHOOPS.
This week, Representative Andy Biggs of Arizona asked the director of the U.S. Trustee Program, a Justice Department unit, for clarity on the requirements governing how bankruptcy professionals comply with the Bankruptcy Code’s “disinterestedness” standard. Per The Wall Street Journal, Representative Biggs is “concerned that undisclosed conflicts at McKinsey & Co.’s restructuring unit may be compromising the nation’s bankruptcy system.” With all due respect to Mr. Biggs, there are greater dangers to the integrity of the bankruptcy system than the disclosure of McKinsey’s client list. Like some of the points made here (conflicts, generally). And here (independent directors). Or here (professionals’ fees). Or here (venue shenanigans and judges “playing ball”). This wouldn’t be the first time that a Congressman exhibited a negligible understanding of an issue. But we digress.
Anyway, like clockwork, Jay Alix pounced. This week, as (also) reported in The Wall Street Journal (which seems conveniently all over this drama), Mr. Alix filed papers in the U.S. Bankruptcy Court in Richmond Virginia asking the bankruptcy judge to consider reopening the bankruptcy case of Alpha Natural Resources, a case that confirmed eons ago. Per the WSJ:
The revelation that McKinsey had a financial interest in the outcome of Alpha’s bankruptcy warrants reopening the case and revisiting whether the firm failed to properly disclose potential conflicts of interest, according to Mr. Alix.
First, HAHAHAHAHA. Right, ok. We’re sure the judge will reopen the case on this basis.
Second, the article is entitled “Disclosure Advocate Seeks to Reopen Coal Miner’s Bankruptcy.” Therein, the WSJ deadpans:
Mr. Alix has been relentless in his battle with McKinsey. He is currently pursuing litigation against the firm in several courts, hiring some of the country’s top lawyers and ethics experts to help him take on the consulting giant.
Mr. Alix has denied McKinsey’s accusation that he is seeking a competitive advantage for AlixPartners, the prominent restructuring firm he retired from in 2006 but retains a minority ownership stake in.
Right. Of course he isn’t looking to take out a competitor (that once poached his employees) and/or juice his equity. Promise.
He’s a mere “disclosure advocate.”