Czyzewski v. Jevic Holding Corp.

In Jevic Holding Corp.'s Chapter 11 bankruptcy, the trucking company laid off drivers without the 60-day notice required by the WARN Act, giving the drivers a priority wage claim. Later, the debtor, together with Sun Capital Partners, proposed a structured dismissal that distributed remaining assets to lower-priority general unsecured creditors while skipping the drivers' priority claims entirely. The drivers, led by Casimir Czyzewski, objected, arguing this violated the Bankruptcy Code's absolute priority rule. The Supreme Court held that a bankruptcy court cannot approve a structured dismissal that deviates from the ordinary priority rules without the consent of affected priority creditors. The case was reversed and remanded.

The U.S. Supreme Court reversed the Third Circuit, holding that structured dismissals cannot circumvent the mandatory priority scheme of the Bankruptcy Code absent consent of the impaired priority claimants. The case was remanded for proceedings consistent with this opinion.

Whether a bankruptcy court may approve a structured dismissal that distributes estate assets in a manner violating the Bankruptcy Code's ordinary priority rules without the consent of the affected priority creditors.

The decision strengthened the absolute priority rule in bankruptcy, safeguarded employee wage claim priorities, and significantly restricted the use of structured dismissals to bypass statutory creditor protections, reshaping Chapter 11 exit strategies nationwide.