At first glance, it didn’t look like a fair fight. On one side: an enormous and powerful global consulting company. On the other: the retired founder of a smaller turnaround firm who has become a thorn in the side of its larger rival.

But the brawl that is erupting in the federal bankruptcy court in Houston has the potential to cause big problems for the consultancy McKinsey & Co.

The courtroom fight hinges on whether McKinsey or its clients have hidden interests in a bankrupt coal company that the firm has been advising, a practice prohibited by federal laws meant to ensure that one insider can’t effectively cut itself or its friends a great deal at the expense of others.

The man leveling the accusations, Jay Alix, is a retired turnaround expert who has made it his personal mission to harry McKinsey.

Normally, a firm of McKinsey’s size would swat away a gadfly’s attacks. But in this case, which involves the bankruptcy of Colorado’s Westmoreland Coal, Alix has a powerful ally: the U.S. Justice Department. On Dec. 14, the department said in a court filing that McKinsey was fraught with “pervasive disclosure deficiencies” and should be dismissed from the Westmoreland case immediately and stripped of the fees it had earned so far.

If that were to happen, it would deal a severe blow to McKinsey’s reputation, as well as its argument that the firm is free of conflicts of interest.

The judge overseeing the Westmoreland bankruptcy case, David R. Jones, warned both sides this month about the rising stakes. “The way this has been teed up, I don’t see an out for both sides,” said Jones, the chief judge of the U.S. Bankruptcy Court of the Southern District of Texas.

Westmoreland had been sprinting through a bankruptcy process that started in October and was on track to be wrapped up in February. But then Alix filed a 163-page objection, accusing the prestigious consulting firm not just of hidden conflicts of interest, but of crimes including fraud — “all sorts of heinous acts,” as Jones put it.

Westmoreland asked Jones to overrule Alix’s objection, but he said he couldn’t do that.

“I don’t like someone to stand up in my court and accuse someone of committing a crime,” he said. “There has to be an airing of this issue, given what’s been done.”

Both sides are aiming for a trial late in January,.