A Houston bankruptcy court has cleared the U.S. Trustee — the Justice Department's bankruptcy watchdog — to pursue the clawback of legal fees awarded to the law firm Jackson Walker in cases overseen by a judge who was in a romantic relationship with one of the firm's partners, Reuters reported.

Chief U.S. Bankruptcy Judge Eduardo Rodriguez ruled that the U.S. Trustee has standing to seek the fees, according to Reuters and WiseVoter's account of the ruling. The decision is a procedural step: it allows the fee challenge to proceed and does not by itself order any money repaid.

The dispute centres on bankruptcy cases handled by former U.S. Bankruptcy Judge David Jones involving former Jackson Walker partner Elizabeth Freeman. The Texas Lawbook reported the U.S. Trustee had told the court it was unnecessary to expand the claw-back litigation beyond the 33 bankruptcy cases already proceeding that involve Jones and Freeman.

The case has become one of the most closely watched judicial-ethics fights in the U.S. bankruptcy system, raising questions about disclosure, conflicts of interest and the integrity of fee awards approved in cases before a judge with an undisclosed personal connection to a lawyer appearing before him.