For those of you watching for a ruling from the Supreme Court in In re Jevic, mark your calendars! Oral argument has been set for Monday, November 28, 2016.
If you haven’t been tracking the case, this is an excellent time to get up to speed.
Simply put, the Supreme Court granted certiorari in Czyzewski v. Jevic Holding Corp. to decide whether “structured dismissals” can be used to wrap up a Chapter 11 bankruptcy case. A structured dismissal is a creative (or, depending on your perspective, inappropriate) solution that bankruptcy lawyers have come developed to resolve a case–often following a sale of substantially all of the company’s assets–without the delay and expense of a formal chapter 11 plan process but with more elegance and closure than creditors would have if the case were simply dismissed. The problem? Nothing in the Bankruptcy Code contemplates “structured dismissals.” And often they include “gifting” of assets from a secured creditor’s collateral to various unsecured creditors. Unhappy creditors who are left empty-handed have complained that these agreements violate the priority of creditor distributions called for under Section 507 of the Bankruptcy Code.
For a more detailed discussion, you might want to read Rochelle’s Daily Wire, published by the American Bankruptcy Institute. Or if you want to go really crazy, you can read all the pleadings on the Supreme Court’s blog.
Mette H. Kurth