Jevic Holding Corp. v.CIT Grp./Business Credit, Inc., No. 14-1465 (3d Cir. 2015)
Annotate this CaseJevic , a trucking company, was acquired by Sun Capital in a leveraged buyout financed by lenders led by CIT. CIT extended $85 million in revolving credit, which Jevic could access while it maintained at least $5 million in assets. Jevic had to reach a forbearance agreement with CIT, with a $2 million guarantee by Sun, to prevent CIT from foreclosing. In 2008, Jevic’s board authorized a Chapter 11 bankruptcy filing. The company notified employees of their impending terminations. At that point, Jevic owed $53 million to senior secured creditors (CIT and Sun) and $20 million to tax and unsecured creditors. Jevic’s terminated truck drivers filed a class action alleging violations of federal and state Worker Adjustment and Retraining Notification (WARN) Acts. The Committee of Unsecured Creditors brought a fraudulent conveyance action, alleging that Sun, with CIT’s assistance, “acquired Jevic with virtually none of its own money based on baseless projections,” and hastened Jevic’s bankruptcy by saddling it with unmanageable debts. Jevic’s remaining assets were $1.7 million in cash (subject to Sun’s lien) and the action against CIT and Sun. All tangible assets had been liquidated to repay the CIT lenders. The Unsecured Creditors, Jevic, CIT, and Sun reached a settlement that left out the drivers, whose uncontested WARN claim was of higher priority than tax and trade creditors’ claims. The Third Circuit affirmed approval of the settlement, despite deviations from section 507 priorities, based on “sound findings” that traditional routes out of Chapter 11 are unavailable and the settlement was the best feasible way of serving the interests of the estate and creditors.
The court issued a subsequent related opinion or order on August 18, 2015.
The court issued a subsequent related opinion or order on May 9, 2017.
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