The United States Court of Appeals for the Third Circuit plays a uniquely important role in the development of the bankruptcy laws. The liberal venue rule for bankruptcy cases set out in 28 U.S.C. § 1408 has led to the disproportionate filing of large and mega chapter 11 bankruptcy cases being filed in the District of Delaware. The decisions of the Third Circuit are binding on the District Court and Bankruptcy Court for the District of Delaware. Consequently, the decisions of the Third Circuit govern that disproportionate number of large and mega chapter 11 cases. Furthermore, because the bankruptcy court decisions in these mega cases often involve greater dollar amounts, they are more likely to be appealed, which can result in the Third Circuit being one of the few circuit courts to address a given issue.
In Official Committee of Unsecured Creditors v. CIT Group/Business Credit Inc. (In re Jevic Holding Corp.), 787 F.3d 173 (3d Cir. 2015), the Third Circuit recently considered the propriety of a “structured dismissal” of a chapter 11 case that provided for a distribution of estate assets contrary to the distributional scheme set out in the Bankruptcy Code. In Jevic, the debtor was … Continue Reading