The Justice Department urged a Texas court to reject Westmoreland Coal Co.'s application to hire McKinsey & Co. as its restructuring adviser because the consulting giant still hasn’t put to rest concerns about its connections to interested parties in the bankruptcy case.

Conflict-of-interest disclosures by McKinsey’s restructuring advisory business, McKinsey RTS, “remain incomplete, inadequate and, in some areas, raise questions,” the U.S. Trustee’s office, the DOJ’s bankruptcy monitoring program, said in its brief filed Aug. 20 at the U.S. Bankruptcy Court for the Southern District of Texas.

The brief, filed by acting U.S. Trustee Henry G. Hobbs Jr., is a...