%1

The global consulting firm McKinsey and Company faced claims on Friday that it had failed to disclose the dual roles it was playing in three bankruptcy cases, potential violations of federal requirements meant to prevent an undisclosed conflict of interest from tainting the outcomes, the New York Times reported. In one case, the Justice Department asked a judge in Virginia to reopen the bankruptcy of Alpha Natural Resources and force McKinsey to return about $20 million in fees because, the department said, McKinsey concealed for years that it was a secured creditor of the coal company while advising it. Separately, a bankruptcy judge in Texas asked the Justice Department to look into allegations of similar activity by McKinsey in the current case of another coal company, Westmoreland Coal, and the closed case of GenOn Energy, a power company. The Office of the U.S. Trustee, a division of the Justice Department, took the unusual step of seeking to reopen the Alpha Natural Resources bankruptcy after investigating the complaint of another creditor.

Amendments and news rules to the Federal Rules of Bankruptcy Procedure will take effect tomorrow. Some of the changes included in the amendments to the FRBP include:

- Rule 3002.1 has been amended to address procedures for handling payment changes in home equity lines of credit in consumer cases. - Rule 5005 has been amended to require electronic filing absent good cause and to make that a national rule. - Rule 7062 applies Federal Rule of Civil Procedure 62 to adversary proceedings but clarifies that the stay of proceedings to enforce a judgment is only for 14 days in an adversary proceeding and not the 30 days in a district court case. - Rule 8002 has been amended to clarify, among other items, time requirements for filing a notice of appeal. - Rule 8006 now allows the bankruptcy court to file a statement on the merits of direct certification to the court of appeals when the parties make a joint certification. - New Rule 8018.1 authorizes a district court to treat a bankruptcy court’s judgment as proposed findings of fact and conclusions of law if the district court determines that the bankruptcy court lacked constitutional authority to enter a final judgment.

For an overview of all amendments and new rules effective tomorrow, please click here.