London Daily

Focus on the big picture.
Friday, Oct 03, 2025

McKinsey Bankruptcy Unit Faces Criminal Probe

McKinsey Bankruptcy Unit Faces Criminal Probe

A McKinsey & Co. unit faces mounting legal and court challenges as the giant consulting firm defends its bankruptcy-advisory business.
A global consulting company formerly headed by Canada’s new ambassador to China is reportedly under criminal investigation into allegations that it concealed conflicts of interest while advising bankrupt companies.

The investigation by U.S. federal prosecutors and a separate one by the U.S. Trustee Program, a unit of the Justice Department that oversees the administration of bankruptcy cases, cover the period when Canada’s Beijing envoy, Dominic Barton, was the global managing partner of McKinsey & Co. There is no indication that Mr. Barton himself is under investigation.

Mr. Barton served as CEO of the elite consulting giant for nine years and left the top job in July 2018, but stayed on as global managing partner emeritus until Sept. 4 this year when Prime Minister Justin Trudeau named him as Canada’s new ambassador to China.

The New York Times and Wall Street Journal cited unnamed U.S. prosecutors in New York and sources in the U.S. Justice Department, who said that McKinsey & Co. is the subject of a probe over whether it broke Chapter 11 bankruptcy rules. This includes, according to the New York Times, whether McKinsey “quietly steered valuable assets to itself or favoured its own clients over other creditors."

U.S. Justice Department spokesperson Nichole Navas Oxman declined to comment on media reports about a criminal investigation into McKinsey and Co. The office of Foreign Affairs Minister Chrystia Freeland declined to say whether she is concerned about this probe.

Court battles over bankruptcy cases have cost McKinsey & Co. millions of dollars in penalties imposed by the U.S. bankruptcy watchdog including a US$15-million settlement in February over “disclosure deficiencies.” Late last year, McKinsey & Co. paid another US$17.5-million in a bankruptcy case involving renewable energy company SunEdison and promised to improve its disclosure protocols.

One of these U.S. court battles could see the Canadian ambassador to China called to testify about his former firm’s work on bankruptcy cases.

Jay Alix, the wealthy founder of restructuring giant AlixPartners, has spent the past three years pursuing McKinsey & Co., including Mr. Barton, in courts throughout the United States.

He blames Mr. Barton for failing to take corrective action on bankruptcy files while he was running the company, and his court actions have personally embroiled the former McKinsey head in ongoing legal matters.

On Oct. 29, a bankruptcy judge in a Texas coal bankruptcy case gave Mr. Alix the right to demand documents from McKinsey and question its executives under oath.

David Jones, a Houston judge, had told the court in January he “going to need to hear" from Mr. Barton personally rather than through a written deposition. “You get the truth by swearing people in, and put them on the stand, and you subject them to cross examination, and we figure what the truth is,” the judge said.

Daniel Lemisch, a lawyer for Mr. Alix, said he believes it’s likely the court will subpoena Mr. Barton. The case goes to trial in February 2020.

“Dominic Barton was the head of McKinsey at the time that the alleged improprieties took place in their disclosures,” Mr. Lemisch said.

McKinsey’s head office in New York did not immediately respond to a request for comment Tuesday.

Mr. Barton would not be covered by diplomatic immunity in this case because the investigation covers events in the United States, before he became ambassador to China.

Mr. Alix has provided the courts and media, including The Globe and Mail and New York Times, with transcripts of conversations he had with Mr. Barton over a 14-month period beginning in September, 2014. He alleges that Mr. Barton admitted to breaking bankruptcy laws, promised to get out of the bankruptcy business and later reneged and offered to steer consulting business to AlixPartners – a statement Mr. Alix saw as an attempted bribe.

Mr. Barton told The New York Times in March that Mr. Alix misconstrued what he actually meant.

“I was getting so fed up with his repetitive complaints that I said something like, ‘Jay, there are plenty of opportunities in the transformation service sector – apart from bankruptcy companies – that AlixPartners should see,” Mr. Barton told the Times.

In January of this year, a federal judge in Virginia reopened a bankruptcy case involving coal producer Alpha Natural Resources after learning that McKinsey & Co. had not disclosed, as required by law, that it was among the company’s secured creditors through MIO Partners, a US$25-billion investment fund for current and former McKinsey partners. The court heard that the head of McKinsey’s bankruptcy practice was also a member of MIO’s board.

The Wall Street Journal also reported Tuesday that prosecutors are examining McKinsey’s investment unit, MIO Partners. MIO held undisclosed stakes in hedge funds in roughly half of the bankruptcy cases it worked on between 2002 until the end of 2016.
Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×