Delaware District Judge Leonard P. Stark has seemingly split with the Second Circuit and held that the safe harbor in Section 546(e) of the Bankruptcy Code does not bar fraudulent transfer claims brought on behalf of creditors under state law, ratifying a June 2016 opinion from Delaware Bankruptcy Judge Kevin Gross.

The Bankruptcy Protector

Back in September, the Bankruptcy Protector announced that was introducing a new periodic series: theJevic Files. As promised, we have published intermittent updates identifying cases where Jevic priority skipping issues are raised and adjudicated.

In this post, we attempt to provide a succinct summary of all cases decided post-Jevic.

How Courts Are Applying Jevic

If, like me, you have ever scratched your head in confusion while preparing your taxes and thought to yourself – “I can’t believe the IRS takes such an absurd position on xyz tax exemption I want to use – who comes up with these crazy positions?” – then you might take some pleasure in a recent opinion from Judge Gross of the United States Bankruptcy Court for the District of Delaware calling an argument made by the IRS “strained and a bit confusing.” You read that right.

The U.S. Supreme Court will hear oral argument today inU.S. Bank National Association v. Village at Lakeridge (15-1509). At issue in the case is whether the appropriate standard of review for determining non-statutory insider status is the de novo standard of review applied by the U.S. Courts of Appeals for the 3rd, 7th and 10th Circuits, or the clearly erroneous standard of review adopted for the first time by the U.S. Court of Appeals for the 9th Circuit in Village at Lake Ridge.

In In re Short Bark Industries Inc., 17-11502 (Bankr. D. Del. Sept. 11, 2017), Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware read the Supreme Court’s holding in Jevic narrowly in connection with a settlement of a dispute on DIP financing.

The bankruptcy bar is abuzz following the Supreme Court’s recent decision in Czyzewski v. Jevic Holding Corp., 15-649, 2017 BL 89680, 85 U.S.L.W. 4115 (Sup. Ct. March 22, 2017), holding that bankruptcy courts may not approve structured dismissals that do not adhere to the Bankruptcy Code’s priority scheme.