(Bloomberg) -- McKinsey & Co. agreed to pay $15 million to end a probe by the U.S. Trustee into whether the global consulting giant violated disclosure rules designed to prevent conflicts of interest in corporate bankruptcies, a federal judge said in a court filing.
Under the terms, McKinsey didn’t admit wrongdoing and the U.S. Trustee agreed to drop its objections to fees charged by the company’s bankruptcy unit in three Chapter 11 cases. The U.S. Trustee is an arm of the Department of Justice that monitor’s bankruptcies to ensure compliance with federal law.
U.S. Bankruptcy Judge Marvin Isgur had been mediating a months-long dispute between McKinsey and the U.S. Trustee and Jay Alix, a retired bankruptcy adviser. The Trustee’s office and Alix accused McKinsey of hiding potential conflicts of interest that could have disqualified from the company from acting as a bankruptcy adviser in some cases.
A McKinsey spokesman confirmed the agreement. Alix is not part of the deal, according to the court statement by Isgur.
The $15 million will be evenly divided by three companies that McKinsey advised in bankruptcy.
The U.S. Trustee probe grew out of a fight between McKinsey and Alix, founder of a rival bankruptcy advisory firm. Alix, who retired several years ago, but remains a well-known figure in the restructuring world, sued McKinsey in federal court in New York last year accusing the firm of flouting bankruptcy rules. In bankruptcy, lawyers and financial advisers are required to disclose any potential conflicts and cannot have any financial ties that could taint their restructuring advice.
McKinsey has said it complies with all appropriate bankruptcy rules, and that Alix is just trying to push a competitor out of the bankruptcy advisory business.
To contact the reporter on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net
To contact the editor responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net
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