Czyzwski v. Jevic Holding Corp.: Supreme Court Revisits the Scope of Bankruptcy Court Equitable Powers

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1 Czyzwski v. Jevic Holding Corp.: Supreme Court Revisits the Scope of Bankruptcy Court Equitable Powers By Mark A. Speiser, Harold A. Olsen, and Judah J. Gross* When may a bankruptcy court exercise its equitable powers in a manner that may be inconsistent with the express provisions of the Bankruptcy Code? In 2014, the Supreme Court decided Law v. Siegel, 1 in which it held that the Bankruptcy Court lacked equitable power to surcharge the debtor s exempt property, regardless of the debtor s wrongful or inequitable conduct, in light of an express provision of the Bankruptcy Code, section 522(k), which mandates (with exceptions not relevant under the facts of that case) that exempt property is not liable for payment of any administrative expense. 2 Law v. Siegel thus stands for the proposition that the Bankruptcy Court may not exercise its equity power in contravention of an express Bankruptcy Code provision. In Czyzwski v. Jevic Holding Corp. ( Jevic ), 3 the Supreme Court had another opportunity to evaluate the reach of equity powers under the Bankruptcy Code. The Jevic analysis points to considerations that were not highlighted in Law v. Siegel, including the relevance of bankruptcy policies to the analysis and the nature of the proposed action as interim or final relief. The Jevic Case At issue in Jevic was whether distributions made to creditors pursuant to a structured dismissal 4 were subject to the strict priority schemes mandated by the Bankruptcy Code in the contexts of Chapter 11 plans and Chapter 7 liquidations. In connection with the leveraged buyout of Jevic, a New Jersey based transportation company, a group of lenders provided Jevic with an $85 million revolving credit facility secured by a lien on all of Jevic s assets. In May 2008, Jevic and several of its affiliates filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. At the time of its bankruptcy filing, Jevic owed approximately $53 million to its secured creditors, and over $20 million to its general unsecured and tax creditors. Shortly after the filing, the Bankruptcy Court appointed an Official Committee of Unsecured Creditors to represent Jevic s unsecured creditors. Former employees of Jevic filed suit in the Bankruptcy Court, and obtained a judgment for violation of state and federal Worker Adjustment and Retraining Notification (WARN) Acts. Approximately $8 million of the * Mark A Speiser is a partner, Harold A. Olsen is a special counsel, and Judah J. Gross is an associate in the Financial Restructuring department of Stroock & Stroock & Lavan LLP. 373

2 NORTON JOURNAL OF BANKRUPTCY LAW AND PRACTICE former employees claim qualified for priority under 11 U.S.C.A. 507(a)(4), entitled to payment ahead of Jevic s general unsecured creditors. Separately, the Creditors Committee alleged fraudulent transfer and preference claims arising out of the leveraged buyout, seeking relief from the lenders and the acquiring company. Jevic, the defendants and the Committee negotiated a settlement whereby the Committee s lawsuit would be dismissed with prejudice as part of a structured dismissal of the bankruptcy case. The defendants agreed to cover the legal and administrative fees of Jevic and the Committee, and allocate $1.7 million of cash collateral held by Jevic to a trust for the purposes of paying certain administrative creditors, with the remaining amount to be distributed to Jevic s general unsecured creditors on a pro rata basis. The settlement made no provision for the priority claims of the former employees, and upon dismissal, those employees would be left with no means of recovery from any of Jevic s assets. The settlement thus implicated the absolute priority rule, which mandates that absent full satisfaction of a creditor s allowed claims, no member of a class junior in priority to that creditor may receive anything at all on account of their claim or equity interest. 5 The absolute priority rule is embodied primarily in two areas of the Bankruptcy Code. First, a Chapter 11 plan of reorganization generally must comply with the absolute priority rule, and absent consent of the senior creditors, the junior creditors and equity may not receive or retain value under the plan unless the senior creditors are paid in full. 6 Second, section 726 of the Bankruptcy Code mandates a waterfall of distributions in a Chapter 7 liquidation, including a first right to payment for claims entitled to priority in the order set forth in section 507 of the Bankruptcy Code. 7 In either a Chapter 11 plan or a Chapter 7 liquidation, the proposed structured dismissal would violate the absolute priority by making a distribution to lower priority creditors, including general unsecured creditors, while giving no recovery to the priority wage claimants. 8 The Bankruptcy Court approved the settlement and entered an order dismissing Jevic s bankruptcy case. 9 On appeal to the District Court, the former employees argued that the structured dismissal violated the absolute priority rule established by the Bankruptcy Code by providing for payment to general unsecured creditors without payment of their priority wage claims. The District Court held that failure to comply with the absolute priority rule did not bar the approval of the settlement because the settlement [was] not a reorganization plan. 10 The Third Circuit affirmed, concluding that structured dismissals are not per se bound by the Code s absolute priority rule. 11 The Third Circuit noted that when Congress codified the absolute priority rule in Chapter 11, it did so in the context of plan confirmation and neither Congress nor the Supreme Court has ever said that the rule applies to settlements in bankruptcy. 12 Relying on the Second Circuit s decision in In re Iridium Operating LLC, 13 the Third Circuit observed that although the Code s priority scheme must be the most important factor when considering whether a settlement is fair and equitable and should be approved under 374

3 CZYZWSKI V. JEVIC HOLDING CORP.: SUPREME COURT REVISITS THE SCOPE OF BANK- RUPTCY COURT EQUITABLE POWERS Bankruptcy Rule 9019, a noncompliant settlement could still be approved when the remaining factors weigh heavily in favor of approving the settlement[.] 14 Among those factors are (1) the balance between the litigation s likelihood of success and the settlement s future benefits, (2) the chances that the litigation will be complex and protracted and (3) whether the settlement is in the interests of the creditors. 15 The Third Circuit distinguished between reorganization plans and settlements and held that because it would make sense for the Bankruptcy Code... to leave bankruptcy courts more flexibility in approving settlements than in confirming plans a bankruptcy court may deviate from the Code s priority scheme if there are specific and credible grounds to justify the deviation. 16 The court concluded that such specific and credible grounds existed, as there was no prospect of a plan being confirmed, and a conversion to Chapter 7 would have resulted in all remaining value being distributed only to the secured lenders. 17 Thus, the structured dismissal, along with the Committee settlement, was the only commercial alternative with which any value could be distributed to general unsecured creditors. 18 Although the court acknowledged that deviation from the section 507 priority scheme in the structured dismissal context would likely be justified only in rare circumstances, the Third Circuit held that the facts in Jevic warranted such a deviation. 19 The Supreme Court reversed. The Court began its analysis by noting that the priority system that governs distributions under a Chapter 11 plan or a Chapter 7 liquidation has long been considered fundamental to the Bankruptcy Code s operation. 20 The fundamental importance of the priority system mandates more than simple statutory silence if and when Congress intended to deviate from the priority scheme. 21 After analyzing the relevant provisions of the Bankruptcy Code, the Court was unable to find any affirmative indication that would allow for a violation of the absolute priority rule via the backdoor means of a structured dismissal. The Court noted that section 1112(b) of the Bankruptcy Code merely provides a bankruptcy court the power to dismiss a Chapter 11 case, [b]ut the word dismiss itself says nothing about the power to make nonconsensual priority violating distributions of estate value. 22 Similarly, the Court explained that section 349(b), which provides for the effects of dismissal, does not provide a sufficient basis for a bankruptcy court to alter the priority system mandated by the Bankruptcy Code. 23 Section 349(b) generally provides that a dismissal reinstates certain prepetition proceedings, reinstates certain transfers or liens avoided during the bankruptcy, vacates certain orders entered in the case, and revests property of the estate in the entity in which such property was vested immediately prior to the bankruptcy. Although section 349(b) does provide that these effects may be altered for cause, the Court held that the for cause provision of 349(b) was limited to giving bankruptcy courts the flexibility to make the appropriate orders to protect rights acquired in reliance on the bankruptcy case. 24 Because no provision of the Bankruptcy Code either explicitly or implicitly allowed for an end-of-case distribution of 375

4 NORTON JOURNAL OF BANKRUPTCY LAW AND PRACTICE estate assets in contravention of the absolute priority rule, the settlement and structured dismissal were impermissible. Thus, [a] distribution scheme ordered in connection with the dismissal of a Chapter 11 case cannot, without the consent of the affected parties, deviate from the basic priority rules that apply under the primary mechanisms the Code establishes for final distributions of estate value in business bankruptcies. 25 In reaching its conclusion, the Court cited Law v. Siegel for the proposition that the courts cannot alter the balance struck by the statute. 26 Contravening the Statute Indirectly, and the Importance of Bankruptcy Policy Law v. Siegel concluded that whatever other power the Bankruptcy Court had to sanction the debtor s wrongful conduct, it may not contravene express provisions of the Bankruptcy Code[.] 27 The Jevic Court was compelled to take a more nuanced approach, as it acknowledged that in the context of structured dismissals [t]he Code does not explicitly state what priority rules-if any-apply to a distribution in these circumstances. 28 The Court identified the priority scheme as a basic underpinning of business bankruptcy law, 29 and noted that a priority-violating Chapter 11 plan may not be confirmed over the objection of an impaired class of creditors. 30 The importance of the priority system leads us to expect more than simple statutory silence if, and when, Congress were to intend a major departure. 31 Section 1112 governing dismissals was silent on priority, and section 349 generally was designed to return to the status quo ante. 32 Unlike Law v. Siegel, where the challenged action rather clearly contradicted an express statutory mandate, the challenged action in Jevic was not expressly prohibited by the Code sections relied upon sections 1112(b) and 349. Rather, the action was viewed as contradicting other Bankruptcy Code provisions that did not expressly apply in the dismissal context, but embody such fundamental bankruptcy policies that to permit the structured dismissal in Jevic would impermissibly end-run those very provisions. The Court found the structured dismissal in Jevic to be analogous to an improper sub rosa plan, whereby all of the debtor s assets are sold under section 363 and the proceeds distributed outside of a Chapter 11 plan and without the safeguards of the plan process. 33 The Jevic decision certainly makes sense when placed in context. Congress provided for three possible outcomes in Chapter 11. In two of these plan confirmation and conversion to Chapter 7 the priority scheme clearly and expressly applies. The third alternative, dismissal, is silent as to priority, but generally was intended to preserve the status quo ante rather than to readjust the relative rights of creditors or effectively preclude certain creditors from recovery. However, although Jevic is now the law of the land, it is worth noting that all three lower courts the Bankruptcy Court, District Court and Circuit Court of Appeals reached the opposite conclusion by taking a perhaps more pragmatic approach that allowed 376

5 CZYZWSKI V. JEVIC HOLDING CORP.: SUPREME COURT REVISITS THE SCOPE OF BANK- RUPTCY COURT EQUITABLE POWERS for an exception in rare circumstances. Bankruptcy law recognizes several other fundamental policies, including equal treatment of similarly-situated creditors, 34 stopping the race to the courthouse and giving the debtor a breathing spell, 35 maximizing value for creditors 36 and providing a fresh start to the debtor. 37 It will be interesting to see if and how Jevic is applied, outside the structured dismissal context, where the proposed action does not directly contravene an express provision of the Bankruptcy Code, but runs counter to a fundamental policy or statutory scheme. The Concept of Finality in Jevic The Jevic Court also addressed a number of situations in which courts have approved interim distributions that appear to violate the priority rules. These include critical vendor orders and roll-up financings. In each of these situations, relief is granted early in the case, and although it seems to implicate the priority rules to pay particular prepetition creditor in full ahead of other creditors, these payments do not necessarily foreclose or diminish recovery by priority creditors. Implicit in this is that such early payments will preserve and maximize estate value so that the priority claims will be paid in full under a Chapter 11 plan, and in compliance with the Bankruptcy Code s priority scheme. A critical vendor motion is typically filed early in the case, and requests authority to make immediate payments on account of pre-petition claims to certain vendors the debtor deems critical to its continued operations. Critical vendor payments are often linked to obtaining an agreement from the vendor to continue to provide ordinary commercial terms during the bankruptcy. The premise is that if the debtor failed to pay these amounts, the vendors would discontinue providing goods and services that are essential to the debtor s business, thereby impairing the going concern value of the debtor and its estate, or even making it impossible for the debtor to continue. Although critical vendor relief is fairly commonplace, it has come under criticism. In In re Kmart Corp., 38 the Seventh Circuit declined to approve critical vendor relief, although it found authority to grant critical vendor relief in section 105 of the Bankruptcy Code, which requires that the relief be both necessary and appropriate to carrying out the provisions of the Bankruptcy Code. Notwithstanding a bankruptcy court s power under section 105, the court in In re Kmart Corp. affirmed the lower court s denial of critical vendor relief on the grounds that the debtor failed to prove both (1) that without the relief, the vendors would cease dealing with the debtor and (2) that with relief, the business would gain enough from the continued transactions with the vendors such that some residual benefit would flow to remaining disfavored creditors. In a post-jevic decision, In re Pioneer Health Services, Inc., 39 the Mississippi bankruptcy court found that as a factual matter no significant offsetting bankruptcy-related justification existed for providing the critical vendor relief. 40 The court relied on both In re Kmart Corp. as well as Jevic s restrictive view of critical vendor payments 41 and found that the relief request could not be granted notwithstanding section

6 NORTON JOURNAL OF BANKRUPTCY LAW AND PRACTICE for the following reasons: (1) the debtor failed to make a showing that the critical vendor relief was in fact critical as opposed to important or preferred, 42 (2) the debtor had not shown that without the relief, the critical vendors would actually cease doing business with the debtor, and (3) there appeared to be legal alternatives through which the debtor could assure the critical vendors continue to supply services to the debtor, through the enforcement of the automatic stay. Notably, the court cited to Jevic for the proposition that a structured dismissal similar to the facts in Jevic was contrary to the provisions of the Code because it does not preserve the debtor as a going concern; it does not make the disfavored creditors better off; it does not promote the possibility of a confirmable plan; it does not help to restore the status quo ante; and it does not protect reliance interests. 43 The court thereby implied that any postpetition payment to a critical vendor that does not preserve the debtor and make disfavored creditors better off may not be made in violation of the Code s priority scheme. A roll-up is a postpetition financing where lenders prepetition loans are repaid or granted administrative priority, outside of a Chapter 11 plan, in connection with the provision of new postpetition credit. When faced with tight credit markets, Chapter 11 debtors will typically have difficulty finding fresh capital with which to fund its bankruptcy and as such, courts will often approve roll-up financing that incentivizes lenders to provide such critical capital and ensures debtors will avoid liquidation. 44 Commentators have noted that similar to critical vendor payments, the validity of roll-ups lies in the powers of equity granted to the court under section In both the critical vendor and roll-up financing contexts, the Jevic court stressed that these are not final, outcome-determinative actions that effectively preclude a more senior creditor from any recovery. Rather, they promote bankruptcy policies of fostering a successful reorganization and preserving and maximizes value so that even the initially-disfavored creditors are better off in the end. 46 In contrast, the structured dismissal in Jevic was a final disposition it did not preserve the debtor as a going concern, foster a confirmable plan, or make the disfavored creditors better off. 47 For the Court, this was categorically different from the interim relief described above (which, while it may condone a temporary departure from priority rules, is actually designed to foster a successful plan in accordance with the priority rules), and so offensive to the priority scheme that there could be no rare case exception. As noted by the Bankruptcy Court in Jevic, this was so even though under a strict application of the priority rules, the former employees would likely receive no recovery absent a settlement. 48 Moreover, the Court was sensitive to the difficulty in establishing a workable standard for what constituted sufficient reasons to invoke a rare circumstances exception, and the risk that the floodgates would be opened and such an exception would quickly swallow the rule. 49 In distinguishing interim distributions from the final distribution at issue in Jevic, the Court noted the lack of any significant offsetting bankruptcy- 378

7 CZYZWSKI V. JEVIC HOLDING CORP.: SUPREME COURT REVISITS THE SCOPE OF BANK- RUPTCY COURT EQUITABLE POWERS related justification to permit a priority-skipping structured dismissal. 50 This suggests a balancing analysis, yet the Court went on the reject the Third Circuit s rare case exception to the absolute priority rule based upon a finding of sufficient reasons, challenging the lower courts findings that the priority-skipping distribution was necessary to the settlement, and that absent the settlement all unsecured creditors would receive nothing. 51 That the former employees were no worse off under the settlement was not the appropriate test, but given the Court s analysis on this point, might the structured dismissal have been approved if, even though it still technically violated absolute priority, it had distributed funds to partially satisfy both the priority claims of former employees and the non-priority claims of other creditors? In that case, the priority claimants would have been better off with the settlement than without. Conclusion Limited to the context of priority-shifting structured dismissals, the Jevic decision is clear. It is difficult, however, to draw from it a general rule for the application of equity powers in all circumstances. Clearly, exercise of an equity power cannot directly contradict an express statutory provision. But if it does not do so, can the power be exercised so long as it does not indirectly contradict or end-run another part of the bankruptcy statutory scheme? And must that statutory scheme embody a fundamental bankruptcy policy? How fundamental? 52 If there is a direct or indirect contradiction of the Bankruptcy Code, is it ameliorated (outside of the distribution context) by the fact that the relief sought is interim rather than final? NOTES: 1 Law v. Siegel, 134 S. Ct. 1188, 188 L. Ed. 2d 146, 59 Bankr. Ct. Dec. (CRR) 43, Bankr. L. Rep. (CCH) P (2014). 2 See M. Speiser and H. Olsen, Reexamining the Equitable Powers of the Bankruptcy Court after Law v. Siegel, Pratt s Journal of Bankruptcy Law, Oct Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 197 L. Ed. 2d 398, 63 Bankr. Ct. Dec. (CRR) 242, 77 Collier Bankr. Cas. 2d (MB) 596, 41 I.E.R. Cas. (BNA) 1613, Bankr. L. Rep. (CCH) P (2017). 4 Broadly stated, a structured dismissal is a dismissal of the bankruptcy case, generally with the consent of some or all of the stakeholders in the case, subject to certain additional conditions such as an agreed distribution of assets. 5 In re Dow Corning Corp., 456 F.3d 668, 672, 46 Bankr. Ct. Dec. (CRR) 222, Bankr. L. Rep. (CCH) P 80664, 2006 FED App. 0260P (6th Cir. 2006). 6 See, e.g., In re DBSD North America, Inc., 634 F.3d 79, 93, 65 Collier Bankr. Cas. 2d (MB) 201, Bankr. L. Rep. (CCH) P (2d Cir. 2011) (reversing order confirming Chapter 11 plan because plan failed to satisfy absolute priority rule). 7 See 11 U.S.C.A. 726(a). 8 Section 507(a)(4) grants a fourth priority (out of ten categories of priority claims) for allowed wage claims, up to a statutory maximum amount. 379

8 NORTON JOURNAL OF BANKRUPTCY LAW AND PRACTICE 9 In re Jevic Holdings Corp., Case No (BLS), ECF No (Bankr. D. Del. Dec. 4, 2012). 10 Jevic Holding Corp., 2014 WL at *3 (D. Del. 2014). 11 See In re Jevic Holding Corp., 787 F.3d 173, , 61 Bankr. Ct. Dec. (CRR) 21, 2015 I.E.R. Cas. (BNA) , Bankr. L. Rep. (CCH) P 82826, 165 Lab. Cas. (CCH) P (3d Cir. 2015). 12 In re Jevic Holding Corp., 787 F.3d at In re Iridium Operating LLC, 478 F.3d 452, 47 Bankr. Ct. Dec. (CRR) 243, Bankr. L. Rep. (CCH) P (2d Cir. 2007). 14 In re Jevic Holding Corp., 787 F.3d at 183; see also In re Iridium Operating LLC, 478 F.3d at In re Iridium Operating LLC, 478 F.3d at In re Jevic Holding Corp., 787 F.3d at In re Jevic Holding Corp., 787 F.3d at In re Jevic Holding Corp., 787 F.3d at In re Jevic Holding Corp., 787 F.3d at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at 987 (quoting Law v. Siegel, 134 S. Ct. at 1198). The Court stated that it was not offering a view on the legality of structured dismissals in general. See Jevic, 137 S.Ct. at Law v. Siegel, 134 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at Jevic, 137 S.Ct. at 984. While section 349(b) permits a court to for cause, order otherwise the Court concluded that cause was too weak a reed upon which to rest the power to vary the fundamental priority scheme. Jevic, 137 S.Ct. at See Jevic, 137 S.Ct. at 986 (citing In re Braniff Airways, Inc., 700 F.2d 935, 10 Bankr. Ct. Dec. (CRR) 933, 8 Collier Bankr. Cas. 2d (MB) 522 (5th Cir. 1983) and In re Lionel Corp., 722 F.2d 1063, 11 Bankr. Ct. Dec. (CRR) 553, 9 Collier Bankr. Cas. 2d (MB) 941, Bankr. L. Rep. (CCH) P (2d Cir. 1983)). 34 In re Lakeside Community Hosp., Inc., 151 B.R. 887, 893, Bankr. L. Rep. (CCH) P (N.D. Ill. 1993) ( Congress designed the Bankruptcy Code to provide for equal and consistent treatment among similarly situated creditors. ). 35 In re Pioneer Commercial Funding Corp., 114 B.R. 45, 48 (Bankr. S.D. N.Y. 1990) ( The automatic stay has been described as one of the fundamental debtor protections provided under the Bankruptcy Code for the purpose of promoting equal creditor treatment and giving the debtor a breathing spell. ). 380

9 CZYZWSKI V. JEVIC HOLDING CORP.: SUPREME COURT REVISITS THE SCOPE OF BANK- RUPTCY COURT EQUITABLE POWERS 36 In re Ames Dept. Stores, Inc., 316 B.R. 772, 796, 43 Bankr. Ct. Dec. (CRR) 211 (Bankr. S.D. N.Y. 2004) (discussing the the fundamental policy of maximizing estate assets for the benefit of all creditors ). 37 Local Loan Co. v. Hunt, 292 U.S. 234, 54 S. Ct. 695, 78 L. Ed. 1230, 93 A.L.R. 195 (1934) (noting that the purpose of bankruptcy law is to give the debtor a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt ). 38 In re Kmart Corp., 359 F.3d 866, 872, 42 Bankr. Ct. Dec. (CRR) 166, 51 Collier Bankr. Cas. 2d (MB) 1076, Bankr. L. Rep. (CCH) P (7th Cir. 2004). 39 In re Pioneer Health Services, Inc., 2017 WL (Bankr. S.D. Miss. 2017). 40 In re Pioneer Health Services, Inc., 2017 WL at *6 (Bankr. S.D. Miss. 2017). 41 In re Pioneer Health Services, Inc., 2017 WL at *5 (Bankr. S.D. Miss. 2017). 42 In re Pioneer Health Services, Inc., 2017 WL at *5 (Bankr. S.D. Miss. 2017). 43 In re Pioneer Health Services, Inc., 2017 WL at *5 (Bankr. S.D. Miss. 2017). 44 See Nicole Stephansen, Roll-Up Financing Gains Prominence, Restructuring Review 10 (June 2010) A roll-up has the effect of transforming prepetition claims into postpetition, administrative expenses, see Stephansen, Roll-Up Financing Gains Prominence, which cannot be crammed down under a Chapter 11 plan. See 11 U.S.C.A. 1129(a)(9)(A). 45 See, e.g., G. Kuney, Hijacking Chapter 11, 21 Emory Bankr. Dev. J. 19, 57 n. 178 (2004) ( Presumably, the validity of [roll-up DIP remedies] relies on the bankruptcy judge s powers of equity arising inherently and from 105(a) of the Bankruptcy Code. Section 105(a) states that [t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [Title 11].... (quoting 11 U.S.C.A. 105(a))). 46 See Jevic, 137 S. Ct. at See Jevic, 137 S. Ct. at See Jevic, 137 S. Ct. at See Jevic, 137 S. Ct. at 986. This same difficulty is inherent in concepts like equitable disallowance (which permits disallowance of a claim in bankruptcy on undefined equitable grounds, even though none of the express grounds for disallowance in the Bankruptcy Code apply). See, e.g., In re Bernard L. Madoff Investment Securities LLC, 515 B.R. 117, (Bankr. S.D. N.Y. 2014). 50 See Jevic, 137 S. Ct. at See Jevic, 137 S. Ct. at See Jevic, 137 S. Ct. at 984 (describing the priority scheme as bankruptcy s most important and famous rule (quoting Roe & Tung, Breaking Bankruptcy Priority: How Rent-Seeking Upends the Creditors Bargain, 99 Va. L. Rev. 1235, 1236 (2013)) and the cornerstone of reorganization practice and theory (quoting Markell, Owners, Auctions, and Absolute Priority in Bankruptcy Reorganizations, 44 Stan. L. Rev. 69, 123 (1991)). 381