Emory Bankruptcy Developments Journal


Ryan McMullan


Jay Alix v. McKinsey & Co. is the product of a gaping hole in the U.S. Bankruptcy Code: its extensive definition section does not adequately define various key words, including “professional persons” and “disinterested persons.” McKinsey & Co., one of the world’s largest and wealthiest consulting firms, stands accused of violating the disinterested standard set out in 11 U.S.C. § 327(a) and Federal Rules of Bankruptcy Procedure Rule 2014(a). McKinsey, however, maintains that it fully complied with the Bankruptcy Code requirements, and it may well be right; depending on the jurisdiction, and even on the individual judge, the disinterested and disclosure requirements to be employed under the Bankruptcy Code may vary. Previous bankruptcy courts have not applied a clear, consistent standard regarding which entities are subject to the Bankruptcy Code requirements by virtue of being a professional person under 11 U.S.C. § 327(a), what constitutes a disinterested person under 11 U.S.C. § 327(a), or what exactly an entity must disclose under Bankruptcy Rules of Civil Procedure Rule 2014(a) prior to bankruptcy employment. However, the court has just such an opportunity in Jay Alix v. McKinsey & Co. Neglecting to use this opportunity to clarify the Bankruptcy Code could lead to further lawsuits between bankruptcy practitioners, as well as forum shopping by bankruptcy participants, all in an effort to hide potentially significant connections. This Comment proposes that the court should adopt firm standards for both definitional issues, as well as the disclosure requirement, to ensure a fair, transparent bankruptcy process that is in accordance with the original goals of the Code and the bankruptcy system as a whole.