Judge David R. Jones became the nation’s leading bankruptcy judge by making his court an attractive place for troubled businesses to face their creditors. His sudden departure over a previously undisclosed romantic relationship puts that legacy at risk, WSJ Pro Bankruptcy reported. Judge Jones turned his Houston courtroom into the top landing spot for big bankruptcies over the past decade by appealing to corporate management teams and their high-priced advisers. He resigned from the Southern District of Texas bench on Sunday, facing an official misconduct investigation over his failure to disclose his romantic relationship with bankruptcy lawyer Elizabeth Freeman, who was a partner at Texas law firm Jackson Walker until she started her own firm in December 2022. The fallout from Jones’s resignation is still coming into focus, but it tarnishes the court’s reputation for efficiency and predictability that made the Houston court an alluring venue for troubled companies to restructure debt, some lawyers who practice there told the Wall Street Journal. Hundreds of his former cases are now being reassigned to different judges, adding delays to costly and time-sensitive proceedings. “Perhaps the attraction of the Southern District of Texas may be dissipated at least in the short term,” said Cliff White, former director of the Justice Department’s Office of the U.S. Trustee, which monitors the nation’s bankruptcy system. It isn’t clear if there is a legal basis to overturn Jones’s prior rulings. Freeman also worked on bankruptcies in which Judge Jones served not as a judge but as a court-appointed mediator to supervise negotiations. The U.S. Trustee said in court papers last week that Jones’s recent admissions about his relationship with Freeman may call into question at least one bankruptcy mediation he recently oversaw.
