Last week, in In re Jevic, the U.S. Supreme Court reaffirmed the most fundamental principle in bankruptcy – the absolute priority rule – while at the same time recognizing that flexibility in the bankruptcy process itself is essential. It was a very important win for secured lenders.
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Supreme Court: Absolute Priority Rule Applies Absolutely
Yesterday, in In re Jevic, a case of enormous importance to the loan market, the U.S. Supreme Court ruled 6-2 that non-consensual “structured dismissals” that distribute estate assets in violation of the “absolute priority rule” are not permitted under the bankruptcy code. The decision underscores the importance of the absolute priority rule as a bedrock principle of U.S. bankruptcy, a principle that is at the heart of secured lending.
Amicus Roundup: On a Winning Streak
In the past year the LSTA weighed in as amicus curiae (friend of the court) in four cases of enormous importance to the loan market. Happily, the results in the two cases decided so far have been decidedly good. The two other cases have been fully briefed and argued and await decision in the next few months. The cases are recapped below.
In re Jevic
On Friday, September 2nd, the LSTA filed an amicus brief with the Supreme Court of the United States in In re Jevic urging the court to overturn the use of structured dismissals that violate the absolute priority rule, a foundational tenant of the bankruptcy code. This case will determine whether Chapter 11 of the Bankruptcy […]
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