Reversing the Third Circuit in Czyzewski v. Jevic Holding Corp., the Supreme Court ruled 6-2 yesterday in an opinion by Justice Stephen G. Breyer that the bankruptcy court, without consent from affected parties, cannot approve so-called structured dismissals that “deviate from the basic priority rules,” not even in rare cases, according to a special analysis from ABI Editor-at-Large Bill Rochelle. Justice Breyer was careful to narrow the Court’s holding so the opinion would not be interpreted to preclude first-day wage or critical vendor orders. Joined by Justice Samuel A. Alito, Jr., Justice Clarence Thomas dissented, saying that the writ of certiorari should have been dismissed as improvidently granted. Read more.
Additionally, Cliff White, Director of the Executive Office for U.S. Trustees, issued a statement praising the decision and appreciating the efforts of the U.S. Trustee Program in the litigation. “The Supreme Court ruled in favor of truck drivers whose employer fired them, went bankrupt the next day, and then denied them their right to priority payment under bankruptcy law,” White said. “The Supreme Court’s ruling is a victory for the faithful application of the Bankruptcy Code as Congress has written it. When the rules are clear and consistently applied by the courts, then the system works more fairly. In the long run, that benefits all stakeholders — debtors, creditors, and the American public.”
ABI will be holding a media webinar tomorrow at 10 a.m. ET with experts examining the decision. A limited number of spots are available for ABI members to participate in the hour-long program. If you are interested in participating, please register via the following link.
