The Supreme Court held that when a bankruptcy court orders a Chapter 11 case dismissed, it can’t also order the distribution of the debtor’s assets in a way<br />that contradicts the order of payment in a bankruptcy liquidation.<br />Alternatively, the parties might have entered into a settlement, as they did here, but simply avoided the one provision<br />that seemed to get everyone riled up: namely, so long as the settlement did not expressly pay junior creditors when senior ones were still unpaid, no problem.<br />Supreme Court Ruling Draws a Vague Line in Bankruptcy Cases -<br />A few weeks back, the Supreme Court decided Czyzewski v. Jevic Holding Corporation.<br />In reaching this conclusion, Justice Breyer distinguishes most of the other priority violations<br />as interim distributions, which might plausibly make most creditors better off in the long run.
