Corporate turnaround veteran Jay Alix, the founder of AlixPartners LLP, is suing that firm's biggest competitor, McKinsey & Co., alleging the advisory firm engaged in racketeering.
McKinsey "knowingly and intentionally submitted false and materially misleading declarations under oath in the bankruptcy proceedings" to hide conflicts of interest, according to the complaint filed last week in Manhattan district court.
The suit also alleges McKinsey operated "pay-to-play" arrangements in which McKinsey would direct bankruptcy work to attorneys that reciprocated by hiring the firm for consulting work. The suit says McKinsey has unlawfully received at least $101 million in consulting fees, financially harming AlixPartners.
The suit alleges these charges amount to bankruptcy fraud, mail fraud and wire fraud. AlixPartners is not named as one of the parties in the lawsuit.
Jay Alix had sold a majority stake in the firm to private equity firm CVC Capital Partners in 2012. Then in 2016, he teamed up with a pair of Canadian pension fund managers, Caisse de dapot et placement du Quabec and Public Sector Pension Investment Board, as well as Investcorp Group, to buy out a stake held by private equity firm CVC Capital Partners to become a majority shareholder in the company he founded in 1985.
AlixPartners and McKinsey have sparred for years, often competing for the same clients in big bankruptcy and turnaround cases.
McKinsey denies the allegations.
"We will vigorously defend ourselves against these meritless claims and expose Mr. Alix's clear pattern of anti-competitive behavior in court," the company said in a statement.
While AlixPartners work has shifted away from turnarounds in recent years — they only account for roughly a quarter of the business — the Southfield-founded company built a reputation under Jay Alix for restructuring. Jay Alix led the restructuring of General Motors during the Great Recession, operations of the city of Detroit in the 1990s and assisted the Detroit Public School system in 2017.
Alix was a Crain's 40 under 40 honoree in 1994.