Supreme Court Rules in Favor of WilmerHale Client in Closely Watched Bankruptcy Law Case

Supreme Court Rules in Favor of WilmerHale Client in Closely Watched Bankruptcy Law Case

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On March 22, 2017, WilmerHale earned a significant victory when the US Supreme Court ruled in favor of the petitioner and WilmerHale client—a group of truck drivers formerly employed by Jevic Transportation Inc.—in Czyzewski v. Jevic, finding that so-called "structured dismissals" to end Chapter 11 cases cannot be used in a way that violates the Bankruptcy Code's priority scheme.

On behalf of the truckers, WilmerHale contended that Jevic subverted the US Bankruptcy Code's payment priority scheme when it reached a settlement in 2012 with its financial backers using a structured dismissal technique. The deal resolved the company's Chapter 11 case, but essentially wiped out employees' legal claims over hasty terminations. This case raised a fundamental and, until now, unresolved question of bankruptcy law: whether a bankruptcy court may authorize the distribution of value in a way that conflicts with the US Bankruptcy Code's priority scheme as part of a "structured dismissal" of a bankruptcy case.

The WilmerHale team included Partners Craig Goldblatt and Danielle Spinelli, who argued the case before the Supreme Court, Special Counsel Joel Millar and Associate Jonathan Seymour. The firm's co-counsel included Outten & Golden LLP and Loizides PA.

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