logo
Plus   Neg
Share
Email

McKinsey Settles With US DoJ Over Bankruptcy Disclosures

McKinsey & Co. agreed to pay $15 million to settle the U.S. Justice Department allegations that the consulting firm failed to make required disclosures of potential conflicts in three bankruptcy cases it has advised on in recent years.

The Department of Justice's U.S. Trustee Program (USTP) said it has entered into a multi-district settlement agreement with global consulting firm McKinsey & Company, Inc., resolving disputes over the adequacy of McKinsey's disclosures of connections in Chapter 11 bankruptcy cases.

Under the Bankruptcy Code and Rules, the retention and payment of a professional firm by a debtor company in bankruptcy is contingent upon approval by the bankruptcy court after the firm discloses all of its connections to the debtor, creditors, and other parties.

These strict disclosure requirements allow the court, USTP, and parties involved in the case to identify any conflicts of interest that may taint the professional's advice and favor one interested party over another.

The USTP alleged that McKinsey made insufficient disclosures about its clients and investments in certain entities that were connected with the debtors that employed McKinsey to provide financial advice on their respective bankruptcy reorganizations. Specifically, the USTP alleged in court filings that McKinsey failed to identify clients who were connected with the debtors it represented and lacked candor regarding its investments in entities that could create a conflict of interest.

Under the terms of the settlement, McKinsey agrees to pay $15 million in three bankruptcy cases to remedy inadequate disclosures of connections and to make additional disclosures. The payment will be distributed to the creditors and other parties in accordance with the reorganization plans approved by the courts or other applicable law. This is one of the highest repayments made by a bankruptcy professional for alleged non-compliance with disclosure rules.

For comments and feedback contact: editorial@rttnews.com

Business News

Quick Facts

Editors Pick
The European Union on Wednesday ordered Alphabet Inc.'s Google to pay an antitrust fine of 1.49 billion euros for abusing its dominant position in the online search advertising intermediation market by preventing competition. This is the third antitrust fine by the EU against Google and it represents 1.29 percent of the tech giant's turnover in 2018. Shares of BMW Group declined around 5 percent in German trading after the auto giant reported Wednesday weak profit in its fiscal year 2018, despite a 0.1 percent growth in Automotive revenues with higher deliveries. Looking ahead for fiscal 2019, the company expects Group profit before tax will be well below the previous year's level. BMW said it is confident of volume growth in Automotive unit. Starbucks Inc. has announced changes to its Starbucks Rewards loyalty program, noting that the revamp will provide its members with more flexibility and choice when they redeem stars at the company's stores. Starting on April 16, all members of the Starbucks Rewards loyalty program will be able to earn and redeem Stars for Rewards immediately after they join the program.
Follow RTT