McKinsey & Co.’s role as confidential adviser to the world’s most influential companies is complicating its effort to win lucrative work with some of the most troubled, the Wall Street Journal reported today. The Justice Department recently objected to bids by McKinsey’s restructuring arm — Recovery & Transformation Services — to work on the chapter 11 cases of coal-mining firm Alpha Natural Resources Inc. and solar-project developer SunEdison Inc. The problem: McKinsey isn’t naming clients on its long list of business relationships that might create conflicts of interest. McKinsey said in court filings that it isn’t aware of any conflicts of interest, but that it may have worked, or currently works, with the bankrupt companies’ creditors, lenders, shareholders or others involved in the cases, all of whom could potentially have interests that are adverse to the companies now seeking the firm’s guidance. The two cases’ U.S. Trustees each separately criticized those statements as “vague and amorphous.” Without such disclosures, a judge can’t weigh whether a firm’s connections will keep it from being an unbiased advocate for its client, according to David Skeel, a University of Pennsylvania Law School professor. Court hearings to review the criticism are set for the coming weeks.
