A Texas bankruptcy judge on Tuesday appointed a new mediator for Tehum Care Services, a bankrupt affiliate of prison health provider YesCare, to revisit its $37 million settlement facilitated in August by former judge David R. Jones, who resigned from the bench last month following an ethics controversy, WSJ Pro Bankruptcy reported. Judge Jones’s resignation followed an official complaint filed by the chief judge of the Fifth Circuit Court of Appeals, stating probable cause existed to believe that Jones had committed misconduct surrounding his undisclosed romantic relationship with bankruptcy lawyer Elizabeth Freeman, whose then-employer Jackson Walker frequently appeared before Judge Jones. Freeman participated in the negotiation representing YesCare when Judge Jones — who served as a court-appointed mediator for the case — mediated the settlement, according to court papers. The Justice Department’s bankruptcy watchdog in its court filings earlier this month expressed concerns over the “propriety of the mediation that serves as the basis for the global settlement.” A few days after Jones’s resignation, Judge Christopher Lopez with the U.S. Bankruptcy Court in Houston, who has been overseeing the YesCare affiliate bankruptcy proceeding, declined to approve the framework of the company’s bankruptcy exit plan on an expedited basis and instructed the parties to “rethink” the proposal, which was built upon the global settlement. Judge Lopez at that time said he wasn’t questioning the integrity of the mediation, but the proposal didn’t provide enough information for him to approve it. Lawyers of the YesCare affiliate and other stakeholders recently petitioned Judge Lopez to appoint Christopher Sontchi, a retired Delaware bankruptcy judge, as a new mediator to look at the case “clean and fresh.”
