United States Supreme Court

In consolidated appeals arising out of lawsuits filed against a Chapter 11 bankruptcy debtor that declared bankruptcy after it was purchased in a leveraged buyout, the Third Circuit Court of Appeals' decision affirming the Bankruptcy Court's approval of a settlement agreement, which called for a structured dismissal of debtor's Chapter 11 bankruptcy, nonpayment of Worker Adjustment and Retraining Notification (WARN) claims, and payment to lower-priority general unsecured creditors -- thereby violating the Bankruptcy Code's priority rules by paying general unsecured claims ahead of WARN claims -- is reversed where: 1) petitioners have Article III standing; and 2) Bankruptcy courts may not approve structured dismissals that provide for distributions that do not follow ordinary priority rules without the consent of affected creditors.

Appellate Information

• Published 2017/03/22

Judges

• BREYER

Court

• United States Supreme Court

Counsel