A&O's multi-creditor work gives TXU administrator KPMG a headache

Due to concerns over conflicts, particularly at A&O, the other administrator Ernst & Young (E&Y) has not allowed any of the thousands of documents revealing why TXU collapsed to flow to KPMG.

E&Y's stance on A&O acting for KPMG, TXU's banks, one of TXU's energy company creditors Rugeley Power, and the banks for another energy creditor AEX Drax, has greatly disadvantaged KPMG.

KPMG's main work on the administration is to discover what went wrong, while E&Y has been charged with handling all other aspects.

As first revealed by The Lawyer (24 February), A&O and Cadwalader Wickersham & Taft, which is acting for KPMG and TXU's bondholders, will this week present the Commercial Court with a unique 'lawyer's protocol', outlining how they have erected Chinese walls. If the court rejects the protocol, KPMG will have to resort to using its formal powers to get the vital documents from E&Y.

"If this happens it will turn into a complete bun fight," said one source.

A&O did not return calls for comment.