Czyzewski v. Jevic Holding Corp.
U.S. Supreme Court · decided March 22, 2017 · Supreme Court Database (Spaeth)
- Decided
- March 22, 2017
- Term
- October Term 2016
- Vote
- 6–2
- Majority author
- Justice Breyer
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice BREYER delivered the opinion of the Court. Bankruptcy Code Chapter 11 allows debtors and their creditors to negotiate a plan for dividing an estate’s value. See 11 U.S.C. §§ 1128, 1129, 1141. But sometimes the parties cannot agree on a plan. If so, the bankruptcy court may decide to dismiss the case. § 1112(b). The Code then ordinarily provides for what is, in effect, a restoration of the prepetition financial status quo. § 349(b), In the case before us, a Bankruptcy Court dismissed a Chapter 11 bankruptcy. But the-court did not simply restore the prepetition status quo. Instead, the court ordered a distribution of estate assets that gave money to high-priority secured creditors and to low-priority general unsecured creditors but which skipped certain dissenting mid-priority creditors. The skipped creditors would have been entitled to payment ahead of the general unsecured creditors in a Chapter 11 plan (or in a Chapter 7 liquidation). See §§ 507, 725, 726, 1129. The question before us is whether a bankruptcy court has the legal power to order this priority-skipping kind of distribution scheme in connection with a Chapter 11 dismissal. In our view, a bankruptcy court does not have such a power. A distribution scheme ordered in connection with the dismissal of a Chapter 11 case cannot, without the consent of the affected parties, deviate from the basic priority rules…
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