By David Thomas

Aug 26 (Reuters) - A former partner at law firm Jackson Walker whose secret relationship with a U.S. bankruptcy judge that ignited an ethics scandal is still dealing with the fallout, including defending her role as a court-appointed trustee in the wind-down of financial services company GWG.

GWG bondholders earlier this month asked for Elizabeth Freeman to be removed as the defunct company's wind-down trustee, alleging that her January 2023 appointment was a "fraud on the court" due to her undisclosed romance with then-U.S. Bankruptcy Judge David Jones.

Freeman on Monday said the bondholders have no standing to demand her removal, and that they waited too long to do so. Freeman said the bondholders' chance expired 180 days after GWG's wind-down plan took effect on Aug. 1, 2023. Jones publicly disclosed his relationship with Freeman two months later, before stepping down from the bench.

"They sat on their rights and allowed the deadline to expire," Freeman said in a filing in Houston bankruptcy court.

The bondholders are also pursuing a separate lawsuit against Freeman, Jones, Jackson Walker and others in Houston federal court. Freeman on Tuesday asked Chief U.S. District Judge Alia Moses to dismiss that lawsuit, arguing that the alleged failure to disclose her relationship with Jones "had nothing to do with the damages" the GWG bondholders alleged.

Mikell West, a lawyer at the Bandas Law Firm who is representing the bondholders, did not respond to a request for comment.

Matthew Probus, a lawyer for Freeman, declined to comment.

A spokesperson for Jackson Walker and Jones' lawyers at McKool Smith did not immediately respond to requests for comment.

Jones was once the busiest bankruptcy judge in the U.S. and presided over the bankruptcies of JCPenney, Neiman Marcus, Party City and Chesapeake Energy, among many others. He resigned in October 2023 after admitting to sharing a home with Freeman.

Jackson Walker has said Freeman deceived it into thinking her relationship with Jones had ended in March 2020 only to admit two years later that the relationship was rekindled.

Freeman left Jackson Walker in November 2022. The GWG bondholders alleged in their removal petition that Freeman was appointed to the wind-down trustee position as a result of a "fraudulent scheme orchestrated by her, Jackson Walker and Jones," who was a mediator in the case.

Freeman's appointment was a "kickback" and a "golden parachute" where she could earn $100,000 for the first six months and then $50,000-a-month after that, the bondholders alleged.

The case is In re GWG Holdings Inc, U.S. Bankruptcy Court for the Southern District of Texas, No. 22-90032.

For the GWG bondholders: Mikell West of the Bandas Law Firm

For Elizabeth Freeman: Matthew Probus of The Probus Law Firm

(Reporting by David Thomas)