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Restructuring firm seeks to reopen Alpha Natural Resources bankruptcy case

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Restructuring firm seeks to reopen Alpha Natural Resources bankruptcy case

Restructuring firm founder Jay Alix launched a case with the U.S. Bankruptcy Court in Richmond, Va., seeking to reopen the case of coal miner Alpha Natural Resources Inc., The Wall Street Journal reported July 19.

Alix, who founded the firm AlixPartners, accused competitor McKinsey & Co. of "gravely troubling and disqualifying disclosure violations," where the firm, working as an adviser to Alpha during its bankruptcy proceedings, concealed an investment in the company and profited by about US$50 million as a result.

According to Alix, the revelation of McKinsey's financial interest in the outcome of Alpha's bankruptcy justified reopening the case and a probe into whether the firm failed to properly disclose potential conflicts of interest.

Previously, Alix filed a lawsuit in a federal court in Manhattan, N.Y., accusing McKinsey and its affiliates of committing bankruptcy fraud, mail fraud, wire fraud and engaging in a pattern of racketeering, according to a Reuters report from May.

A McKinsey spokesperson told the Journal that Alix's lawsuits are a means of discrediting a competitor.

Alpha declared bankruptcy in 2015 to restructure billions of dollars in debt and emerged from bankruptcy a year later. Judges hearing bankruptcy proceedings may reopen closed cases under extraordinary circumstances, including fraud intended to deceive the court, under provisions of the law, the Journal added.