Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistFeaturesBankruptcyLitigation

Trustee Rights and Obligations When Debtor's Ch. 11 Case Converts to Ch. 7

By Rudolph J. Di Massa Jr. and Drew S. McGehrin
August 01, 2021

As a continuation of the ongoing disputes that began with a challenged "structured dismissal" in the Jevic Holdings Corp. bankruptcy case, the U.S. Bankruptcy Court for the District of Delaware recently rendered a decision addressing the rights and obligations of a trustee who has been appointed after a debtor's Chapter 11 case converts to one under Chapter 7 of the Bankruptcy Code. In this latest decision, Official Committee of Unsecured Creditors v. CIT Group/Business Credit (In re Jevic Holdings), No. 08-11066, 08-51903 2021 Bankr. LEXIS 1203 (Bankr D. Del. May 5, 2021), the court held that a Chapter 7 trustee was bound by the pre-conversion actions of the debtors, and that the trustee would not be permitted to step into the shoes of the then-dissolved official committee of unsecured creditors to pursue certain causes of action.

Factual Background

Jevic Transportation, a New Jersey trucking company, was acquired by Sun Capital Partners through a leveraged buyout in 2006. Sun Capital financed the buyout with funds advanced by a group of lenders led by CIT. By May 2008, Jevic's financial situation had worsened significantly, and Jevic's board ultimately authorized a bankruptcy filing by Jevic and its affiliated companies. At that point, the company halted almost all operations and, on May 19, 2008, it notified its employees of their imminent termination. The next day, Jevic and its affiliates filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code. At the time of filing, Jevic owed $53 million to senior secured creditors Sun Capital and CIT, and over $20 million to general unsecured creditors and taxing authorities.

This premium content is locked for The Bankruptcy Strategist subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

Use of Deferred Prosecution Agreements In White Collar Investigations Image

This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.

The DOJ's New Parameters for Evaluating Corporate Compliance Programs Image

The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.

CLE Shouldn't Be the Only Mandatory Training for Attorneys Image

Each stage of an attorney's career offers opportunities for a curriculum that addresses both the individual's and the firm's need to drive success.

A defendant in a patent infringement suit may, during discovery and prior to a <i>Markman</i> hearing, compel the plaintiff to produce claim charts, claim constructions, and element-by-element infringement analyses.