A Texas judge said on Tuesday that a dispute between Jay Alix, founder of AlixPartners LLP, and McKinsey & Co. over bankruptcy conflicts disclosures “brings into play everything I took an oath to protect” and warned of a “horrific consequence” for the loser in the sprawling legal battle, WSJ Pro Bankruptcy reported. During a hearing in the Westmoreland Coal Co. chapter 11 case at the U.S. Bankruptcy Court in Houston, Judge David Jones told both sides that he intends to get to the bottom of allegations of wrongdoing Alix and McKinsey have levied at each other in recent years. Alix says that McKinsey has for years ignored federal laws requiring bankruptcy advisers to disclose all relationships that could bias their work. McKinsey says Alix is trying to clear the playing field for AlixPartners, a competitor to McKinsey in the corporate turnaround industry. Alix retired from AlixPartners in 2006, but he retains a minority ownership stake. “This has the potential to affect careers, maybe even end careers,” Judge Jones said on Tuesday. “I just want to make sure people understand what they’re signing up for." Judge Jones also oversaw another energy bankruptcy case in which McKinsey worked as an adviser: GenOn Energy Inc. On Tuesday, the judge questioned whether he would have to address that case as well. “I’m worried I did something wrong in GenOn,” he said. “If I did something wrong, I’m going to fix it.”
