A panel of three judges approved a $15 million settlement between McKinsey & Co. and the Justice Department, resolving the government’s allegations that the consulting firm didn’t disclose conflicts of interest in bankruptcy cases it helped steer, WSJ Pro Bankruptcy reported. The settlement, struck in February with the help of a mediator, is one of the largest sums ever paid by a bankruptcy professional for alleged disclosure violations and covers three large chapter 11 cases: coal miner Alpha Natural Resources, solar-energy company SunEdison Inc. and Westmoreland Coal Co. The settlement provides $5 million for unsecured creditors in each case, though exactly how that money will be distributed has yet to be resolved. The deal follows several years of court filings from the Justice Department criticizing McKinsey’s conflicts disclosure practices. Lawyers from the U.S. Trustee Program, an arm of the Justice Department charged with protecting the integrity of the nation’s bankruptcy system, have said that McKinsey’s disclosures didn’t comply with bankruptcy law, because they failed to identity clients with connections to the cases that could pose conflicts of interest. The program’s lawyers also have said that McKinsey “wasn’t forthcoming” about links between its restructuring and investment arms.
