Two of the United States’ most established law firms,
Kirkland & Ellis LLP and
Jackson Walker LLP, have been named in a high-stakes federal lawsuit alleging they concealed a secret romantic relationship that influenced the outcome of a major corporate bankruptcy. The proposed class action complaint, filed in the U.S. District Court for the Southern District of Texas in Houston, raises serious claims tied to judicial ethics, bankruptcy procedure, and investor losses tied to energy giant
Chesapeake Energy’s Chapter 11 restructuring.
Investment Firm Says Romance Skewed Bankruptcy Plan
EJS Investment Holdings, a private investment firm and creditor in the Chesapeake Energy bankruptcy, alleges that Kirkland and Jackson Walker, along with additional parties, failed to disclose a long-running romantic relationship between a Jackson Walker attorney and the judge overseeing the case. The lawsuit argues that this concealment undermined the fairness and integrity of the bankruptcy process, unfairly favoring some creditors over others and resulting in significant financial harm to junior investors like EJS.
According to the complaint, the undisclosed relationship between former U.S. Bankruptcy Judge David R. Jones and then-Jackson Walker partner Elizabeth Freeman played a role in shaping legal strategies and court outcomes that benefited large institutional creditors, while leaving junior creditors with diminished recoveries. EJS claims these actions caused approximately $64 million in damages to its stake of roughly $150 million in Chesapeake Energy’s bankruptcy.
Background: Jones’ Resignation After Relationship Became Public
David R. Jones was once one of the most influential bankruptcy judges in the country, presiding over some of the largest and most complex Chapter 11 cases in the United States, including
Chesapeake Energy. However, his career abruptly changed after an anonymous letter brought widespread attention to his personal relationship with Freeman. Jones resigned from the bench in October 2023 after admitting they were living together, a fact that had not previously been disclosed to litigants or the public.
Prior to his resignation, Jones approved a restructuring plan that allowed Chesapeake to exit bankruptcy with about $3 billion in new financing, reduce more than $7 billion in debt, and cut approximately $1.7 billion from operational costs. The plan was supported by major institutional creditors and heavily backed by Kirkland, which served as lead counsel for the debtors.
Who’s Named in the Lawsuit?
The EJS lawsuit names a group of defendants central to the Chesapeake bankruptcy:
- Kirkland & Ellis LLP, the lead restructuring counsel for Chesapeake Energy, which earned more than $32 million in fees from the bankruptcy.
- Jackson Walker LLP, which also performed legal work in the case and employed Freeman at the time.
- Brown Rudnick LLP, another law firm involved in supporting creditor committee interests.
- David R. Jones, the former bankruptcy judge.
- Elizabeth Freeman, the former Jackson Walker partner at the center of the romance.
The suit contends that all defendants were aware, or should have been aware, of the relationship between Freeman and Jones during their work on the bankruptcy, yet failed to disclose it to the court and interested parties. This alleged nondisclosure, EJS asserts, deprived junior creditors of the opportunity to object or seek recusal based on a conflict of interest.
Allegations Include Racketeering and Conspiracy
EJS’ lawsuit includes a range of legal claims, encompassing:
- Violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) – suggesting patterns of fraudulent or corrupt practices tied to the concealment of the relationship.
- Civil conspiracy – asserting that multiple parties conspired to keep the relationship secret to steer the bankruptcy outcomes.
- Unjust enrichment – claiming the defendants unfairly profited from fees and legal advantages tied to the allegedly compromised proceedings.
The complaint also says that EJS proposed alternative restructuring scenarios that, according to its legal team, would have delivered better outcomes for junior stakeholders but were not pursued because of the influence exerted by the judge and the law firms.
Responses From Defendants
Kirkland & Ellis has strongly rejected the allegations, describing the lawsuit as “meritless.” The firm said that, like others, it had no knowledge of the personal relationship between Jones and Freeman until it became public in October 2023, and that its actions in the bankruptcy adhered to legal and ethical standards.
A spokesperson for Jackson Walker has declined to comment publicly on the litigation. Brown Rudnick and representatives for Freeman did not respond to requests for comment at the time of reporting. Meanwhile, attorneys for Jones have argued that judges should be protected by judicial immunity for decisions made while in office, and that allowing such lawsuits could disrupt the functioning of the judicial system.
Wider Legal Fallout
This case is part of a
broader series of legal challenges and ethical questions emerging from the fallout of Judge Jones’ resignation and his handling of major bankruptcy cases. Prior lawsuits filed by the Bandas Law Firm on behalf of other investors have also sought to hold various parties accountable for damages allegedly tied to the judge’s conduct and the nondisclosure of his relationship with Freeman.
As these high-profile disputes unfold in court, they are likely to attract attention from legal ethics experts and bankruptcy professionals, who may view the outcome as having significant implications for judicial conduct rules, law firm disclosure obligations, and creditor rights in complex Chapter 11 proceedings.
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