Czyzewski v. Jevic Holding Corp.

Sun Capital Partners acquired Jevic Transportation Corporation (debtor) in a leveraged buyout with money borrowed from CIT Group. Two years later, Jevic filed for chapter 11 bankruptcy. Casimir Czyzewski and other former Jevic truck drivers (creditors) sued Jevic and Sun in bankruptcy court, asserting that Jevic terminated them without appropriate notice in violation of a federal statute. The bankruptcy court granted summary judgment for the drivers against Jevic and awarded them roughly $12.4 million, of which $8.3 million was considered a priority wage claim under the Bankruptcy Code. In a separate action, a committee of Jevic’s unsecured creditors brought a fraudulent-conveyance action against Sun and CIT. The parties in that action eventually reached a settlement agreement. The agreement dismissed Jevic’s chapter 11 case and provided, among other things, that Jevic’s remaining assets would be used to pay general unsecured creditors’ claims on a pro rata basis but would not be used to pay the drivers’ higher-priority $8.3 million wage claim. The drivers objected to the settlement because it departed from the Bankruptcy Code’s ordinary distribution-priority rules. The bankruptcy court acknowledged the departure but concluded that it could still approve the settlement. The Third Circuit affirmed, and the United States Supreme Court granted certiorari.