Supreme Court to review priority-skipping settlement and structured dismissal of Chapter 11 case
Introduction
The Supreme Court will consider these key questions next term in Czyzewski v Jevic Holding Corp:
(1)
l May a Chapter 11 debtor in dire straits settle claims of the bankruptcy estate, receive court
approval to distribute the settlement proceeds to junior creditors without paying priority
claims and then obtain dismissal of the bankruptcy case on terms that leave the priorityskipping
settlement intact?
l Alternatively, does such a resolution violate essential aspects of the Bankruptcy Code?
Facts
Jevic Holding Corp filed for bankruptcy in 2008 in the wake of a leveraged buy-out and the
worldwide financial downturn. Its acknowledged debts included $53 million owed to two secured
parties – the buy-out firm (Sun Capital) and a lender that had refinanced the leveraged buy-out debt
(CIT) – plus about $20 million in obligations to general unsecured creditors. In addition, the
bankruptcy ignited two litigations involving substantial claims:
To read in full please use the link below: