Bankruptcy Court: Chapter 7 Trustee Bound By Pre-Conversion Actions of Debtors
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.
June 25, 2021 at 12:14 PM
9 minute read
Bankruptcy
Rudolph J. DiMassa Jr., left, and Drew McGerhrin, right, of Duane Morris.
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.
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