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A duo of bankruptcy judges jointly ordered a long-brewing feud over McKinsey & Co.’s conflict disclosures to mediation, a last resort before commencing a trial that could put several of the firm’s senior partners on the witness stand, WSJ Pro Bankruptcy reported. During a hastily scheduled status conference yesterday, Judge Kevin R. Huennekens of the U.S. Bankruptcy Court in Richmond, Va., said that he hoped a mediator would help hasten a resolution of the conflict between McKinsey and AlixPartners LLP founder Jay Alix, who has accused McKinsey of defrauding the courts by hiding significant conflicts of interest. Judge Huennekens is working in consultation with Judge David Jones of the U.S. Bankruptcy Court in Houston, who is presiding over another case in which McKinsey’s disclosures have been criticized by both Alix and the U.S. Trustee’s Office, a unit of the Justice Department that polices the bankruptcy system.

A judge in Virginia reopened a more than two-year-old case yesterday to consider accusations that the powerful consultancy McKinsey & Company had defrauded his court while advising a bankrupt coal company, the New York Times reported. “These are some of the most serious allegations that I have ever seen,” said Bankruptcy Judge Kevin R. Huennekens of the U.S. Bankruptcy Court for the Eastern District of Virginia. The decision to reopen the bankruptcy case of Alpha Natural Resources was the latest in a series of court actions and legislative maneuvers meant to examine whether McKinsey has failed to disclose investments in the entities it helps reorganize — an arrangement that could allow the company to profit off the plan it helped put in place. The request to reopen came from a retired turnaround specialist, Jay Alix, and was supported by the Justice Department’s Office of the U.S. Trustee. McKinsey has denied wrongdoing. “We continue to stand by our disclosures, which have always fully complied with the law, and we are confident that Alix’s fraud claims will be exposed as completely meritless,” the company said. McKinsey already faces similar claims of misconduct from Mr. Alix in the bankruptcy of another energy company, Westmoreland Coal, in Texas.

USA Gymnastics is asking a U.S. Bankruptcy Court to approve $88,000 in holiday bonuses to its employees, including national teams manager Amy White, the Orange County (Calif.) Register reported. White, who allegedly acting on the orders of then USA Gymnastics chief executive Steve Penny removed from the Karolyi Ranch documents relevant to law enforcement investigations of former U.S. Olympic and national team physician Larry Nassar, is one of 40 employees USA Gymnastics wants to pay annual bonuses to. USA Gymnastics, facing dozens of civil suits filed by more than 220 survivors of Nassar’s sexual abuse as well as decertification by the U.S. Olympic Committee, filed for chapter 11 protection with the U.S. Bankruptcy Court’s Southern District of Indiana on Dec. 5.

Corporate bankruptcy cases unfolding in the nation’s federal courts are largely continuing during the government shutdown, even if it means furloughed Justice Department lawyers have to work for free, the Wall Street Journal reported. While the country’s bankruptcy courts have enough money to operate normally at least until Jan. 18, Justice Department officials are only allowed to play a limited role in continuing corporate bankruptcy cases during the shutdown. Some major cases are proceeding anyway. On Friday, a Delaware bankruptcy judge rejected the Justice Department’s request to pause the bankruptcy case of hospital operator Promise Healthcare Group LLC, which cares for more than 9,000 patients. Justice Department lawyers said their oversight power has been weakened by the government shutdown. Promise officials had argued that halting the case could scare off buyers who are interested in its 16 hospitals and two nursing homes. The Boca Raton, Fla., company employs about 4,500 people in nine states. Justice Department officials who are working without pay asked on Wednesday to halt the case, citing the heavily regulated nature of Promise’s operations. “I have limited ability to continue reviewing orders and participating in hearings,” Justice Department lawyer Danielle Pham told Judge Christopher Sontchi during a Friday hearing in U.S. Bankruptcy Court in Wilmington, Del.