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Former remodeling and construction company owner Leighton “Joe” Wood, who allegedly defrauded dozens of customers, has been using bankruptcy protection to avoid accountability to those very customers, the bankruptcy case’s trustee claimed in a Dec. 18 filing, WJHL.com reported. “The Debtors’ strategy is unfair to their many creditors, who have been thus far deprived due process in this case, and is an abuse of the Bankruptcy process,” Trustee Gerard Vetter wrote in a motion to convert the case to a chapter 7 bankruptcy. Vetter’s filing also reveals for the first time that Wood has a criminal defense attorney and is the subject of a federal criminal investigation. It says that Wood’s attorney, Lynette Byrd, “met with the U.S. Attorney’s Office and federal agents on December 5, 2023” and that she and prosecutor Mac Heavener, an assistant U.S. attorney, “are actively engaged in discussions about possible resolution of the criminal investigation.” Leighton Wood and his wife, Cameron Wood, filed for chapter 11 bankruptcy protection in South Carolina’s federal bankruptcy court Oct. 21. The filing came two months after the Tennessee attorney general filed a civil suit on behalf of dozens of victims who the state claimed were bilked to the tune of “millions of dollars” when Wood failed to complete home renovation work those customers had paid for.

A Texas bankruptcy judge recommended against a government request to move a case challenging fees paid to a law firm that were approved by a former judge who was in an undisclosed relationship with one of the firm’s lawyers, WSJ Pro Bankruptcy reported. The U.S. Trustee, a division of the Justice Department that functions as a watchdog for the nation’s bankruptcy system, is challenging roughly $13 million of fees earned by Texas law firm Jackson Walker in 17 bankruptcy cases over which former bankruptcy judge David R. Jones presided. One of Jackson Walker’s partners, Elizabeth Freeman, lived with Jones during that time and owned a house with him in the Houston area, which neither Jones, Freeman nor Jackson Walker revealed at the time. Jones resigned from the bench in October after the Fifth Circuit Court of Appeals started an investigation and filed a complaint stating it had found probable cause of misconduct. Southern District of Texas Chief Bankruptcy Judge Eduardo Rodriguez, who consolidated the government’s 17 motions to transfer the Jackson Walker fee matters under his watch, said the request didn’t meet the standard that allows such a move. He determined the motions weren’t filed in a timely manner, and that the trustee didn’t establish that the transfer would benefit the progress of the 17 bankruptcy cases. Instead, Judge Rodriguez said, the matter should stay in his court. This consolidated approach would mostly alleviate the concerns over efficiency raised by the government and Jackson Walker, the judge said.

The "National Guard and Reservists Debt Relief Extension Act of 2023" (H.R. 3315) was signed into law yesterday by President Biden after passing the Senate on Monday and the House of Representatives on Dec. 11. The bipartisan measure was reintroduced on May 15 by Rep. Steve Cohen (D-Tenn.) to provide the same means-test treatment under chapter 7 of the Bankruptcy Code for guard members and reservists who were recently federally deployed as that of active duty servicemembers. The legislation exempts for an additional four-year period, from the application of the means-test presumption of abuse under chapter 7, qualifying members of reserve components of the Armed Forces and members of the National Guard who, after September 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days.

Houston bankruptcy court rejected a request from creditors of hand-sanitizer maker 4E Brands to disqualify Judge Marvin Isgur from ruling on a fee dispute involving the company’s law firm, saying no evidence of bias was established, WSJ Pro Bankruptcy reported. The creditors of 4E Brands, whose products included Blumen Hand Sanitizer and Assured Hand Sanitizer, are seeking the return of more than $860,000 in legal fees it paid to law firm Jackson Walker since its 2022 bankruptcy. The case was overseen by former Bankruptcy Judge David R. Jones who approved the hiring of Jackson Walker as bankruptcy counsel and also signed off on the fees charged. Jones resigned in October from the bench after his romantic relationship with former Jackson Walker bankruptcy lawyer Elizabeth Freeman became public. Creditors seeking a reversal of the fees had said that, while Freeman didn’t bill hours in the 4E Brands case, she benefited from the fees the company paid the law firm because she was a Jackson Walker equity partner. Judge Isgur took over several of Jones’s cases, including the 4E Brands case, when Jones stepped down.

Creditors of 4E Brands say findings of a survey they commissioned support their case for Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston to recuse himself from weighing in on a dispute over legal fees the maker of hand sanitizer paid its law firm, WSJ Pro Bankruptcy reported. The creditors are seeking the return to 4E Brands of fees it paid to the Jackson Walker law firm. The creditors say Isgur shouldn’t rule on their request because of his friendship and professional relationship of more than two decades with David R. Jones, a former bankruptcy judge who had been handling the company’s chapter 11 case. Results of the survey were made public late Wednesday after the creditors presented them in a hearing a day earlier before Chief Bankruptcy Judge Eduardo Rodriguez of the Southern District of Texas. At the hearing, Mark P. Jones, a public opinion survey analyst at Rice University, testified he provided 150 adults randomly selected across the Southern District of Texas with basic facts about the circumstances of the fee dispute without naming its parties, and then asked if a judge in the situation could be impartial. Roughly 80% of respondents said it was unlikely a judge could be impartial in the fee matter, said Jones, who isn’t related to the former judge. “They don’t know [Judge Isgur] as a person. Just looking at the objective facts in the case, these objective observers say this appears to be a case where Judge Isgur would not be able to be impartial,” said Jones. San Antonio-based 4E Brands filed for chapter 11 protection in February 2022, following the fallout from a recall of and lawsuits over its methanol-contaminated hand sanitizers.

The conservative campaign to dismantle corporate diversity initiatives has hit pay dirt by focusing on a surprising target: law firms, the Washington Post reported. Since August, the conservative American Alliance for Equal Rights has sued or sent threatening letters to at least seven law firms, demanding that they shutter diversity fellowship programs, and claiming that they exclude qualified White and Asian students based on race. Meanwhile, five Republican state attorneys general have fired off letters to 100 top law firms, threatening legal action and suggesting that “racial discrimination in employment and contracting may be commonplace” in the legal industry. The American Alliance for Equal Rights is a nonprofit run by Edward Blum, the activist who successfully challenged affirmative action in college admissions, leading to a landmark Supreme Court ruling in June. “Many law firms have been some of the most enthusiastic and outspoken entities to restrict opportunities to resources based on race and ethnicity,” Blum said. “It is likely that other corporate entities with similar racially discriminatory policies will be sued in the coming weeks.”