Supreme Court rules on bankruptcy settlement procedure case News
Supreme Court rules on bankruptcy settlement procedure case

The US Supreme Court [official website] ruled [opinion, PDF] Wednesday in Czyzewski v. Jevic Holding Corporation [SCOTUSblog materials], a case involving the authority of bankruptcy courts. The case involves a trucking company seeking Chapter 11 bankruptcy [US Courts backgrounder] protection, which was being sued by truck drivers for failing to provide legally-required notice of their dismissal. The bankruptcy court approved a dismissal of the case allowing the company to distribute its assets to high-priority secured creditors and low-priority unsecured creditors but skipped over the drivers’ mid-priority claims. The Supreme Court determined that bankruptcy courts do not have the legal power to override the distribution scheme ordered in connection with a Chapter 11 claim. The case was remanded for further proceedings that will determine a distribution plan that will include the mid-priority creditors and their settlements.

The Supreme Court heard [JURIST] oral arguments for the case in early December. The court granted certiorari [JURIST report] for the case in June, and a decision is expected by June 2017. Also in June the Court ruled [JURIST report] in Puerto Rico v. Franklin California Tax-Free Trust that Section 903(1) of the Bankruptcy Code preempts Puerto Rico’s Recovery Act. In May the court ruled [JURIST report] in Husky International Electronics, Inc. v. Ritz that “actual fraud,” as it relates to the discharge of debt under the bankruptcy code, may be committed by purposeful concealment and does not require overt misrepresentation. In June 2015 the court ruled in Baker Botts v. ASARCO that law firms representing those undergoing bankruptcy proceedings cannot recoup fees [JURIST report] incurred when defending the fees they originally charged their client.

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