Top US bankruptcy judge steps back from major cases under ethics review

By Dietrich Knauth

NEW YORK (Reuters) – U.S. Bankruptcy Judge David Jones in Houston, who has overseen more major Chapter 11 cases than any other U.S. judge since 2016, said on Friday that he was stepping down from overseeing large cases and faces an ethics review over a previously undisclosed romantic relationship.

Jones admitted over the weekend that he has been in a years-long romantic relationship and shared a home with bankruptcy attorney Elizabeth Freeman, who until recently worked at a law firm that filed many cases in Jones’ Houston courthouse.

“I have been the subject of a fair amount of media attention over the past week,” Jones said during a Friday court hearing. “That media attention has prompted an investigation” by the New Orleans-based 5th U.S. Circuit Court of Appeals.

Legal ethics experts have said that Jones should have disclosed the relationship or recused himself from cases involving his partner’s firm.

Jones said that all his bankruptcy cases involving large companies would be assigned to other judges during the investigation.

Jones has been the busiest bankruptcy judge in the U.S. since January 2016, overseeing 11% of all Chapter 11 bankruptcies involving more than $100 million in liabilities, according to data from Debtwire, which provides research and intelligence on credit markets. He has recently presided over the bankruptcies of JC Penney (OTC:) Co Inc, Neiman Marcus Group, Party City and Chesapeake Energy Corp (NYSE:), among many others.

Jones will step down from Houston’s two-judge “complex case panel,” which handles all Chapter 11 cases involving debtors with more than $200 million in liabilities.

U.S. Bankruptcy Judge Marvin Isgur, who stepped down from that panel a year ago, will replace Jones, and all of Jones’ complex cases will be randomly assigned to Isgur or the panel’s other member, U.S. Bankruptcy Judge Christopher Lopez said.