On May 21, 2015, the United States Court of Appeals for the Third Circuit, in a 2-1 opinion, recognized a Chapter 11 bankruptcy case could be dismissed through a “structured dismissal” that deviates from the priority scheme set forth in Section 507 of the Bankruptcy Code. With its decision, the Third Circuit joined the Second Circuit in rejecting the Fifth Circuit’s per se exclusion on “structured dismissals” that deviate from the Bankruptcy Code’s priority scheme, providing secured creditors an option to end a Chapter 11 case where no plan could be confirmed and Chapter 7 liquidation is not a viable alternative.

Background -

Jevic Transportation, Inc. and its affiliates (the “Debtors”) filed for Chapter 11 protection on May 20, 2008, two years after Sun Capital Partners (“Sun Capital”) acquired the company in a leveraged buyout. A group of lenders led by CIT Group (“CIT”) financed the buyout.